The Study Of Free Cash Flow And Inefficient Investment Based On The Moderating Effect Of Internal Control's Quality Under The Different Property Rights

Investment,consumption and exportation are the three driving forces of stimulating the economic growth.Investments are always indispensable in the whole macro economy.From the micro level of a company to see,the investment is of vital importance and directly related to the company's performance;efficient investments can promote the development of enterprises rapidly and healthily.However,because of the exists of the first type of agent problem and the second type of agent problem and the problems of financing constraints.Enterprises tend to result over investment and under investment behaviors.The inefficient investment may pull the enterprise into the abyss of death.Thus,investment efficiency has been the focus of scholars at home and abroad,they have done a series of studies about the inefficient investment from the perspectives of free cash flow,corporate governance,dividend policy and financing constraints.Along with our country pay more attention to the internal control,as a system of supervision and governance arrangement,it should have a certain role in the governance of inefficient investment.In addition,according to our unique national conditions,State owned enterprises may be subject to government intervention in the internal control system design and investment decisions the State owned enterprises are responsible for developing the economy,increasing employment,raising taxes,maintaining social stability and other political tasks besides maximizing shareholder wealth as the goal.Therefore,the state-owned enterprises may not only consider the net present value,but also take into account other factors,as non-state enterprises,their main objective is just to maximize shareholder wealth they are Profit oriented.Therefore,compared with the state-owned enterprises,the positive effect of the internal control of the non-state-owned enterprises is more obvious on the positive correlation for the excess free cash flow and the over investment.from another point of view,Because of the similarity between the financial sector and state-owned enterprises,the financial sector in the allocation of funds may be more inclined to allocate funds to state-owned enterprises,Therefore,the non-state owned enterprises are facing more severe external financing constraints The non-state owned enterprises with higher internal control may be more effective in alleviating the external financing constraints.Therefore,compared to state-owned enterprises,Non-state owned enterprises' internal control is more likely to have a positive effect on the positive correlation for the shortage of free cash flow and under investment.Based on this,this paper reviews the relevant literature and analyzes the relevant theory,searched the data of A-share listed companies from 2010 to 2015 and built the panel data to study the influence of internal control on the sensitivity of free cash flow and inefficient investment under the different property right.The empirical study shows:(1)The more free cash flow that the firms have,the more serious of the over investment.Internal control can effectively inhibit the positive correlation between free cash flow and over investment.(2)The shorter free cash flow that the firms have,the more serious of the under investment.Inter control can effectively inhibit the positive correlation between the shortage of free cash flow and under investment.(3)Compared to the state-owned enterprises,the positive effect of the internal control of non-state owned enterprises on the positive correlation between free cash flow and inefficient investment is more obvious.Finally,based on the results the empirical study,this paper puts forward some suggestions on the construction of internal control,the reform of state-owned enterprises and financial reform.