Capital Misallocation,Ownership Structure And Firm Performance

How to allocate capital within the enterprise is an important issue that investors pay attention to.The company's business activities include operating activities and investment activities.On the basis of not violating the overall strategy of the enterprise,in order to use capital more economically and reasonably,enterprises must apply limited total business capital to high-return business operations as much as possible and consider abandoning low-return business activities.Capital misallocation is the inefficiency of the distribution of capital among operating activities and investment activities.The degree of capital misallocation reflects the effectiveness of capital allocation between the two activities of the company in investment activities and operating activities.Manufacturing industry is the basic industry of the national economy.The study of the efficiency of capital allocation in manufacturing enterprises is of great significance to improving the competitiveness of each enterprise and even the entire industry.This article is based on the previous studies of scholars,focusing on the study of the effective allocation of internal capital of the company..This article first explained the research significance and research methods,determined the research framework of this paper,defined the concept of research,and explained the novelty of this paper's research.Then,by using the method of normative research,we reviewed and summarized the relevant literature on internal capital allocation efficiency,equity structure and corporate performance at home and abroad,and explained the theoretical basis of this paper.This article takes the existing theory and achievements as the starting point,,puts forward the research hypothesis through the theoretical analysis.This article selects China's manufacturing listed companies as sample objects,borrows the evaluation index of internal capital misallocation proposed by previous scholars,and measures the concentration degree of ownership by the largest shareholder's shareholding ratio.The sum of the proportion of state-owned shares held by the previous ten largest shareholders We measure the proportion of state-owned shares,construct a fixed-effect regression model for panel data,and use stata software for statistical analysis to study the role of internal capital mis-pairing performance and the regulatory effects of different characteristics of equity.This paper finds that the state of capital allocation in China's manufacturing industry has not reached a more ideal state.More than 30%of companies have a situation where the stock of misallocation(CMs)is less than zero,that is,a serious capital error.This reflects that some manufacturing listed companies have seriously neglected the risks and rewards of different business activities in their capital allocation decisions.In the sample of manufacturing companies in China,the increase in the degree of capital misalignment has had an adverse effect on corporate performance.Further from the perspective of equity structure,the excessive power of large shareholders makes it easy for them to arbitrarily intervene in the company's capital allocation activities in order to seek private interests for them,which in turn makes it difficult for companies to mitigate the damage caused by capital misallocation.With the increase in the concentration of ownership,the detrimental effect of capital misallocation on firm performance has increased.As far as state-owned shares are concerned,due to the absence of owners or excessive political intervention,the state-owned shareholders have paid insufficient attention to the company's capital allocation activities and financial performance,and can not fully exert the governance role of shareholders,resulting in difficulties for enterprises to ease the detrimental effect of capital misallocation.Thus,with the increase in the proportion of state-owned shares,the detrimental effects of capital mismatch on firm performance have also increased.Therefore,companies should improve the capital allocation efficiency evaluation system,on the basis of the long-term strategy of the enterprise,reduce capital mismatches among business activities rationally,and improve corporate performance.At the same time,it should also improve corporate governance,optimize the ownership structure,moderately limit the power of major shareholders,and control the proportion of state-owned shares,thus alleviating the negative impact of capital misallocation.