A Research On The Relationship Between Social Capital And Investment Efficiency From Family Business

After the reform and opening-up,the development of family business is very rapid,and many family businesses have been listed to expand their own scale.Social capital is established through various social relations of enterprises,and to a certain extent,it can help enterprises reduce external transaction costs.However,due to the particularity of corporate social capital,state-owned enterprises have comparative advantages and are easier to obtain social capital than family enterprises.In family enterprises,social capital is quite different.It is of great significance to study the impact of different family enterprises' social capital on investment efficiency.At the same time,due to the late start of market economy in China,there are still some imperfections in the system.In the family business,the problem of large shareholders encroaching on the interests of small and medium-sized shareholders is more serious,which makes the family business have the phenomenon of inefficient investment from time to time.Starting from this practical problem,we should continue to carry out theoretical research and literature review,and further explore the relationship between family business social capital,financial flexibility and investment efficiency.After the relevant literature and theoretical research,the hypothesis is put forward according to the relevant research.On this basis,we use database software to analyze the empirical results and test the hypothesis.In the further analysis,the social capital of family business is tested according to different financing constraints,life cycle and industry characteristics.Financing constraints represent an objective status quo,analyzing the impact of family business social capital on investment in different financing environments;from the perspective of life cycle,we compare the different impacts of social capital in different stages of development on investment from the vertical perspective of development;the industry characteristics are the impact of horizontal differences on the social capital and investment of family business compared with the industry characteristics of different enterprises.It is found that the more social capital family businesses have,the more likely they are to over invest.According to the principal-agent theory,family members often hold the control of the enterprise,and in order to maximize their own interests,they often encroach on the interests of small and medium-sized shareholders.With the accumulation of social capital,the ability of enterprises to obtain resources and the increase of investment opportunities,it also provides more opportunities for large shareholders to occupy small and medium-sized shareholders.In this case,the purpose of investment is not only to make profits,but also to preserve wealth or even to transfer profits,which will lead to over investment.Secondly,financial flexibility in family business social capital and Over investment plays a significant intermediary role.The increase of social capital in family business will improve the ability of capital management and the ability to cope with the change of external environment,thus improve the financial flexibility of the enterprise.To a certain extent,the improvement of financial flexibility will aggravate the investment behavior of enterprises,enhance the blindness of investment,and inevitably invest in projects with negative NPV,resulting in inefficient investment.Financial flexibility is the intermediate variable connecting the social capital and investment efficiency of family business,and plays an intermediary role in it.Moreover,through grouping test,it is found that the impact of family business social capital on investment efficiency is more significant in the early stage of development,and in the capital-intensive enterprises with relatively high financing constraints.At the end of this paper,some suggestions are put forward to promote the development of family business.On the one hand,we need to pay more attention to social capital,establish a scientific mechanism to make social capital play a positive role,and promote the efficiency of enterprise investment;on the other hand,we need to improve the internal governance,improve the supervision mechanism,and ease the management interference of large shareholders.