Research On The Impact Of Non-state-owned Shareholders On Over-investment In Stateowned Enterprises

State-owned enterprises are the backbone of the development of the national economy.Since the reform and opening up,the reform and development of state-owned enterprises have made significant progress.However,state-owned enterprises still have some outstanding contradictions and problems that need to be resolved urgently.Due to the particularity of state-owned enterprises,state-owned enterprises usually cannot only take economic performance as their business goal,but also need to undertake some social and political goals.In addition,State-owned enterprises “owners are absent”and government intervention are more serious.Leading to state-owned enterprises usually generate over-investment behavior,and decrease resource allocation efficiency.With the deepening of the reform of state-owned enterprises,the reform of mixed ownership has become the focus of the current state-owned enterprise reform.In the process of deepening the reform of mixed ownership system,the introduction of non-state-owned shareholders will inevitably have a certain impact on the governance structure of state-owned enterprises.The literatures on the governance role of non-state-owned shareholders have been discussed in terms of capital cost,internal control quality,accounting information quality,and executive compensation incentives.However,as an important means of improving corporate value,there are little literatures attention the impact of state-owned shareholders on over-investment behavior of state-owned enterprises.This paper using a sample of Chinese firms listed on the Shanghai or Shenzhen stock markets during in 2008-2017,manually collects the relevant datas of non-state-owned shareholders' participation in governance,and examines the impact of non-state-owned shareholders on over-investment of state-owned enterprises from the two dimensions of equity structure and high-level governance.The results show that:(1)the participation of non-state-owned shareholders in governance can effectively inhibit the over-investment behavior of state-owned enterprises.The results are robust after I address endogeneity and sample selection concerns.And this governance role is more siginificant in competitive industries and state-owned enterprises with lower government intervention;(2)Further tests show that compared with the shareholding ratio of non-state-owned shareholders,the non-state-owned shareholders appointed directors have higher governance role.An examination on the dynamic mechanism of directors appointed by non-state-owned shareholders finds that when non-state-owned shareholders began to appoint directors,the level of over-investment of state-owned enterprises is significantly reduced;when non-state-owned shareholders stopped assigning directors,the level of over-investment of state-owned enterprises increased significantly.After subdividing the structure of corporate investment,I find that the impact of non-state-owned shareholders on over-investment in state-owned enterprises is mainly to reduce the proportion of investment in fixed assets,and to increase investment in intangible assets and long-term equity.The research in this paper not only enriches the research literatures on the participation of non-state-owned shareholders in governance and over-investment of state-owned enterprises,but also provides direct empirical evidence and guiding suggestions for the further advancement of Chinese current mixed ownership reform.