Research On The Impact Of Inefficient Investment On Corporate Performance

In recent years,the development of our country is very rapid;especially the development of Chinese economy has played a significant role.Against the foreign market,there are imperfect factors in Chinese market,the corporate governance and market regulation on the flaws,as a result low investment efficiency is widespread in Chinese corporates.The investment efficiency also has important impact on the corporate performance,and high investment efficiency projects can improve the corporate performance,and reduce the cost of enterprises,then promote the rapid development of enterprises.In turn,inefficient investment,will bring losses to enterprises,shorten the corporate life,the most important,it will affect the national macroeconomic development.In this paper,a large number of literatures are reviewed,including the influence factors of inefficient investment,the influencing factors of corporate performance,and the research literature of the effect of inefficiency investment on corporate performance.In addition,the paper analyzes the relevant theoretical basis of the effect of inefficiency investment on corporate performance,and analyzes the inefficient investment and its measurement,as well as the corporate performance and its measure.In this paper,the classification of inefficient investment is divided into two aspects:overinvestment and underinvestmen.At the same time,the paper analyzes the influence mechanism of inefficient investment on corporate performance based on principal-agent theory,behavioral finance theory,information asymmetry theory,free cash flow theory,and modern capital structure theory,which provides the theoretical basis for the study of hypothesis and empirical test.In the future,this paper proposes two research hypotheses with two corresponding research models.The first assumption is that the overinvestment of Chinese manufacturing listed companies will reduce the corporate performance.The second assumption is that the underinvestment of Chinese manufacturing listed companies will reduce the corporate performance,This paper select related data of the main board manufacturing listing corporations from Shanghai Stock Exchange during 2011 to 2015 as the sample,select return on total assets as the explained variable,use irrational investment which established by regression model as explanatory variables,use the cash holdings,company size and asset liability ratio as control variable.Then this paper construct regression analysis model,carry on descriptive statistical analysis;panel data regression analysis robustness test.At last the above two assumptions have been verified.Based on the above conclusions,this paper puts forward with the following suggestions:improve the information disclosure mechanism,do a good job in market supervision;investment activities should be ahead of planning;attention to investment efficiency of key impact indicators and other recommendations.Finally,the limitations and shortcomings of this paper are also described.