Cash Holding, Internal Control And Investment Efficiency

China's enterprises are in the process of economic transformation,to change the mode of economic development and expand domestic demand,it is necessary to optimize the investment structure.Investment is an important strategic activity,so the main goal of the enterprise is to improve the efficiency of investment.The capital market of our country is not complete.The first kind of agency problem,the second kind of agency problem and the information asymmetry often make the investment depend on the internal cash flow.The management for construction of "business empire" interests,easy to excess internal cash flow for excessive investment;in debt financing because of the information asymmetry,easy to cause the enterprise internal cash shortage,which failed to invest in quality caused by lack of investment projects.According to the existing literature,most of them examine the impact of excess cash holdings on over investment,but there is little literature on the relationship between cash flow and underinvestment.As a governance mechanism,internal control has been pursued by domestic and foreign scholars in recent years.However,because of the complexity of the measurement of internal control and not standard,there is little literature to study the effect of internal control on inefficient investment.This paper attempts from the perspective of internal control,the investigation for cash holdings(excess or shortage)and the efficiency of investment(over investment or investment)the relationship between the hope can provide some experience and basis of to speed up the construction of the internal control system and improve the efficiency of investment.Based on the theoretical analysis of the financing constraints hypothesis and the free cash flow hypothesis,this paper combines the effectiveness of internal control governance,and puts forward the corresponding assumptions.In this paper,we choose the data of non-financial listed companies in China in 2009-2015 to test the hypothesis,and discuss the relationship between the internal control and the efficiency of cash holdings and the governance mechanism.Empirical study shows that :1.the more cash holdings in the company,the morelikely to cause excessive investment.Improving the quality of internal control can effectively alleviate the over investment caused by excess cash holdings;2.There is a positive correlation between the company's internal cash shortage and the lack of investment,improve the quality of internal control can weaken the lack of investment due to internal cash shortage;3.Further study found that the internal control,internal control and internal control of the five elements of the internal control of the non optimal cash holdings to alleviate the problem of inefficient investment.In this paper,the results of the robustness test are still consistent.Based on the above conclusions,this paper puts forward some policy recommendations and prospects for future research.The significance of this paper is to enrich the research of cash holdings and investment efficiency,internal control research to improve the efficiency of investment company as a supplement to the enterprise specific experience,improve the construction of internal control play a guiding role in our country in recent years to prove the importance of perfecting the internal control system.