Political Relationship,Over-investment And Excess Capacity

Since the reform and opening up forty years ago,China has created many unprecedented miracles in the history of mankind,such as the largest scale of economic and social transformation.However,in the process of economic transformation and upgrading,the government is still in a relatively strong position,and possesses a more powerful discourse power for resources.In order to obtain more financing preferences,tax incentives and industry access facilitation,the enterprises try to establish relationship with the government.However,on the one hand,the rent-seeking behavior of enterprises does bring some benefits,it also brings about the effects of "hand of looting",which has a negative impact on the investment behavior of enterprises.At present,the capacity utilization rate of manufacturing industry of China is relatively low,and the phenomenon of overcapacity is an indisputable fact.The longterm overcapacity,not only affects the micro-enterprises negatively and causes the nonefficient allocation of resources,and even imposes an adverse influence on the transformation and upgrading of industrial structure in our country macroscopic economy.In March 2017,Premier Li Keqiang took the overcapacity cutting as a focus of the work in the government work report.In recent years,the country has also formulated respective policies to cope with overcapacity,and treated overcapacity as an important goal of development.The government has played the effect of "hand of support",and carried out positive fiscal and monetary policies and a moderately loose monetary policy.Under this background,the enhanced intervention of the government in the economy will increase the role of political association.Therefore,this paper will focus on the the influence of political association on over-investment,especially the relationship between the influence with different enterprise natures,and further exploration of the influence of the over-investment on excess capacity.On the basis of a large number of domestic and foreign literature researches,this paper,taking 24 listed companies listed in Shanghai and Shenzhen A shares from 2012 to 2016 as the research object,uses descriptive analysis,correlation analysis and regression analysis to analyze the relationships among political connections,overinvestment and overcapacity,based on the theory of government predatory hand theory,rent-seeking theory,information asymmetry theory and investment tide theory.It is found that,there is a positive correlation between political connections and over-investment in manufacturing listed companies of China.Moreover,compared with the state-owned manufacturing listed companies,the positive correlations of the private manufacturing listed companies are even more significant.Meanwhile,it is also found that the over-investment is positively correlated with the overcapacity in manufacturing listed companies.Furthermore,the research shows that the over-investment of manufacturing listed companies plays a fully mediating role in the impact of political connections on overcapacity.