The Study On Over Investment In State-owned Enterprises Based On Corporate Governance

Since 1978,the reform and development of state-owned enterprises continue to make significant progress,which made a significant contribution to promoting Chinese economic and social development,protecting and improving people's livelihood and exploring the international market.However,there are still some contradictions and problems to be solved in Chinese state-owned enterprises,such as the modern enterprise system is not yet perfect,capital efficiency needs to be improved and so on.Specifically,there are phenomena of overinvestment and overcapacity in many industries,and state-owned enterprises in these sectors often dominated.So it can be inferred that Chinese state-owned enterprises will be more likely to use internal funds for over-investment.Usually,the ownership structure of the enterprise,the government interventions,the managers' quality and the business scale of the company and so on will affect the efficiency of investment.And in these factors,how to optimize the reform of state-owned enterprises'investment based on the enterprise property rights,internal management oversight system is always a controversial issue.This paper summarizes the status of corporate governance in state-owned companies as well as the research achievements of the past.It selected 8 factors,which may have significant impact on the over-investment of free cash flow,from the perspectives on the composition of the stock rights in the state-owned companies,ownership concentration degree and the internal supervision and management system.The paper use the data of state-owned companies in recent years as research samples,and test the impact of these corporate governance factors.Furthermore,the paper analyzed the data from the perspectives on industry,business status.The following conclusion was made:In our state-owned enterprises,the nature of the controlling shareholders have significant impact on the efficiency of investment.Compared to the controlling shareholder of state shares in nature,the controlling shareholder of state-owned legal person shares of nature can effectively reduce the company's over-investment phenomenon.In addition,the other large shareholders can supervise the behavior of the controlling shareholder on account of the difference on the point of interests with the controlling shareholder.When companies' owners are willing to give stock rights to the managers as rewards or incentives,the enterprises' managers are more willing to think from the perspective of business interests.Therefore,this action can reduce over-investment behavior.Finally,to improve the board of directors and board of supervisors system can bring good effect to improve investment efficiency.The shares of institutional investors can provide enhance the efficiency of fund utilization for the state-owned enterprises in the manufacturing sector.And for the state-owned enterprises in the mining industry,relying solely on improving the corporate governance factors cannot bring effective influence.