Research On Investment Efficiency Of State-owned Enterprises In China

Nowadays,China is in a historic period of reform,a series of policies to deepen reform is in an orderly manner.This paper takes the manufacturing industry as an example,carrying on the empirical analysis through the relevant data and the practice experiences.studies the relationship between the ownership system and the political connection and investment efficiency of China's SOEs so as to provide suggestions and references to the reform of the state-owned enterprise in the new period of time.Under the background of comprehensively deepening reform,state-owned enterprises in China,which are in the national economy,are playing a vital role in the process of China's economic transformation.As we all know,state-owned enterprises(SOE)constructs the solid foundation of Chinese economy.In many industries,SOEs act as a significant approach to allocate resources,grasping the lifeblood of the economy.For this reason,the study on state-owned enterprises should never be ignored.To understand the overall situation of economic development and the reform underway,the issue is worth in-depth exploration and excavation.The academic research on the efficiency of state-owned enterprises started late and current researches is not so thorough.Therefore,in view of the special background of China's reform,it is of great significance to study the efficiency of state-owned enterprises investment and its influencing factors.With Chinese SOEs deepening reform,their investment efficiency has always been the focus of academic and social attention.As one of the three carriages that drive economic growth,investment plays an extremely important role in the expansion and development of the national economy.Many of China's state-owned enterprises are currently showing either excessive investment or lack of investment.In this way,investment efficiency of SOEs is in strong need to be improved.Investment efficiency is the ratio of investment income to investment cost.In recent years,scholars at home and abroad on the investment efficiency of a large number of research,but based on different purposes and perspective,its definition is not a recognized concept.In general,investment efficiency is efficient investment and inefficient invest ent in two forms of performance,inefficient investment is divided into underinvestment and overinvestment.The author uses data from WIND database and selected SOEs in manufacturing industry listed on Shanghai Stock Exchange and Shenzhen Stock Exchange as the empirical sample.As for timeline selection,the author chooses 2000 to 2015,which is long enough to draw a rational conclusion.In this paper,the author constructs a model based on Bertrand and Mullainathan's difference in difference(DID)method and measured the quantitative degree of over-investment and under-investment by the residual of the regression model.The paper analyzes the influence of state control on equity and political connection of executives on the investment efficiency.The model also introduces the scale of enterprise investment,sales growth rate,operating,cash flow,total assets yield,asset-liability ratio,major shareholder control,firm size and total asset turnover ratio as explanatory variables.Through empirical analysis,the following conclusions and policy implications are obtained.The regression results of over-investment and under-investment sub-samples are basically consistent with the overall regression results,and there are some subtle differences in their intrinsic mechanism.It is particularly noteworthy that,no matter over-investment or under-investment,while a high level state control and strong political relations of corporate executives will help reduce the degree of inefficient investment.Firstly,a single factor within state control and political connection has a negative impact on the efficiency of enterprise investment.Secondly,the coordination between state control and political relations positively affects the efficiency of investment.Thirdly,Chinese government can improve the investment efficiency of state-owned businesses by retaining a large number of state-owned shares and appointing executives who have close ties to the political sector.When state control and political relations coexist in a SOE,the enterprise shows higher investment efficiency.This finding on China's state-owned enterprises reform has a practical significance.