Empirical Study On The Level Of Rule Of Law,Internal Governance Mechanism And Investment Efficiency Of Enterprises

With the rise and development of law and finance as an independent subject,the influence of law on economic growth has attracted more and more attention from scholars.As the most important market entity,the investment efficiency of enterprises will also have an important impact on the development level of the financial market.At present,China’s listed companies generally have the problem of non-efficient investment related to over-investment or under-investment,which is not conducive to the improvement of enterprise value,but also restricts the healthy development of the financial market.At the present stage,China has incorporated the building of a law-based society and a law-based country into its strategic layout at the national level.Although there are still many differences in the level of the rule of law in different regions,the overall social law-based environment has been constantly improved and optimized.No matter it is a big country or a small enterprise,only by keeping up with the pace of The Times and quickly adapting to the changes of the environment,can it emerge in the fierce competition in the future.Therefore,the current study of the relationship between the level of rule of law and enterprise investment efficiency is advancing with The Times.In the past research literature,the research focus on internal governance mechanism and enterprise investment efficiency mainly focuses on one aspect of the internal governance mechanism,without comprehensive consideration of internal factors,and without connecting the internal governance mechanism with the external environment faced by enterprises.In this paper,the equity structure,board governance and management incentive in the internal governance mechanism are comprehensively considered,and the rule of law level variable is added to comprehensively study the relationship between the rule of law level,internal governance mechanism and enterprise investment efficiency,so as to provide theoretical support for improving enterprise investment efficiency and promoting financial development.Firstly,this paper reviews and summarizes the relevant theoretical literature on enterprise investment efficiency,and puts forward the research argument of this paper after finding the existing research deficiencies.Then,on the basis of principal-agent theory and investment decision theory,theoretical hypothesis is developed.Then,non-financial insurance listed companies in Shanghai and shenzhen from 2013 to 2017 are taken as the research sample source,and the theoretical hypothesis is empirically tested with data analysis tools.Finally,the empirical results show that :(1)there is a significant positive correlation between the level of rule of law and the efficiency of enterprise investment;(2)the ownership structure affects the investment efficiency,and the ownership concentration and non-circulation ratio are negatively correlated with the investment efficiency of enterprises,while the relationship between ownership balance and investment efficiency is not significant.(3)board governance affects investment efficiency,and the higher the degree of separation between the chairman and the general manager,the higher the investment efficiency of the enterprise.The relationship between the number of board members and the proportion of independent directors and investment efficiency is not significant.(4)management incentive affects investment efficiency,and the more positive correlation exists between monetary incentive and enterprise investment efficiency,the less significant relationship exists between equity incentive and investment efficiency.(5)the level of rule of law can indirectly affect the investment efficiency of enterprises through internal governance mechanism.On the one hand,the level of rule of law can improve the investment efficiency of enterprises by weakening the negative effects of ownership concentration and non-tradable share ratio in the ownership structure.On the other hand,the level of rule of law can improve the investment efficiency of enterprises by weakening the positive effect of monetary incentive in the management incentive on the investment efficiency of enterprises.However,according to the existing research in this paper,no significant relationship has been found between the level of rule of law and the investment efficiency of enterprises through influencing board governance.Finally,according to the research results,the author puts forward some countermeasures and Suggestions to improve the legal environment,promote the equity reform,improve the governance of the board of directors,and attach importance to management incentives.