Technique Effect Of Corporate Investment In Different Market Situation

As the China economy has entered a new norm,the structural contradiction of Chinese manufacturing industry is more and more prominent,and the effective supply could not fully adapt to the dramatic evolution of the demand structure,which leads to industry overcapacity,high inventory and high-end products shortage issues.To effectively implement supply side structural reform,we need active destocking,excessive industrial capacity cut as well as corporate investment and technological transformation and upgrading to expand the effective supply.The change of enterprise supply behavior bases on the information provided by market,so only insight into the mechanism of how market affects enterprise investment decision-making could help us grasp the function and efficiency of the market in the industrial transformation and upgrading process,which could lead to improvement of the industrial policy as well as help China's manufacturing industry out of the bottleneck of development.Therefore,this paper uses market situation to describe market signal and deeply studies the effect of market situation on corporate investment by theory analysis and empirical test.First of all,I construct a project selection model based on market situation and then analyze the effect of market situation on corporate investment and technique effect through logical induction and mathematical deduction with the implantation of production function,principle of profit maximization and the basic idea that investment will change both the number of inputs and the overall technology of an enterprise.The conclusion is that enterprises tend to invest simply to expand production scale,which could lead to the increase of capital labor ratio to some extant when in good market situation,while the same enterprises tend to invest in technology upgrading projects which could lead to more increase of capital labor ratio.Under the condition that the price of the product and the input factor remain unchanged,the difference of factor yield depends on marginal output of factors and capital labor ratio,and the relationship of factor yields changes in different market situation is uncertain.Then I construct the index of the market situation of enterprises and use the panel data of 1524 A shares Listed Companies in China's manufacturing industry from 2005-2015 to test the technical choice of enterprise investment under different market situation.In statistical analysis,differences of enterprise investment behavior,capital labor ratio change and factor yields change under different market situation are analyzed based on mean,variance,quantile and other descriptive indexes.In the empirical test,the influence of firm investment behavior on profitability under different market situation is analyzed with fixed effects panel data model.Through statistical analysis and empirical test I conclude that in bad market situation,corporate are wary of investing and use more capital to replace labor,and at the same time factor yields increase higher and investment has a more positive impact on profitability.In good market situation,corporate investment behavior is more optimistic,and the substitution level of capital for labor is lower,and at the same time factor yields increase lower and investment has a less positive impact on profitability.Therefore,when the market condition is good,the enterprise more easily to invest excessively,which could lead to investment tide and overcapacity,while they tend to carry out technical transformation and improve profitability when the market condition is bad.So we should improve the relevant laws and regulations of corporate governance and strengthen investment supervision in good market situation,and strengthen the prevention of enterprise investment risks.