Relationship Transaction,Analyst Follow-up And Inefficient Investment

As one of the key points in financial management,investment activities can not only increase the value of companies,but also play an indispensable role in economic growth.It is one of the three core issues in financial management that need to be focused on.Healthy and efficient investment can not only improve the efficiency of capital use and gain the recognition of enterprise stakeholders,but also build a healthy capital market and even maintain the harmony of the whole society.However,inefficient investment is very common in Chinese companies,which not only reduces the efficiency of capital use,but also hinders the normal operation of the capital market.Relevant departments such as Shanghai Stock Exchange and Shenzhen Stock Exchange have also released a series of targeted documents,and scholars have more and more research on the factors that lead to inefficient investment.It is urgent to study the impact of relationship transaction on the investment efficiency of enterprises,and put forward effective substantive suggestions.With the rapid development of modern economy,enterprises and suppliers/customers are closely linked,which makes the dependence of both sides continuously improve.Suppliers/customers have interests in enterprises by investing "special capital" in enterprises.Firstly,through the establishment of a trust system,relational transaction can reduce the transaction costs of both sides and increase the competitiveness of companies.Secondly,it can also lead to negative effects such as lock-in,moral hazard,opportunism and so on,which has a certain impact on the investment behavior of companies.In a word,There is practical major to study the influence of related transaction on the inefficient investment of enterprises on the operation and management of enterprises and the maintenance of capital market.After summarizing the theoretical achievements of scholars on relationship trading,analyst follow-up and inefficient investment,based on the theory of relevance and starting from the real market environment of China,this paper takes 2007-2017 China's A-share listed companies as a sample,from the new perspective of relationship trading,based on the principal-agent theory,information asymmetry,relationship contract,relationship specific investment and other theories On the basis of empirical research,this paper demonstrates the correlation between relationship transaction and inefficient investment.At the same time,this paper introduces the variable of analyst follow-up,and empirically studies the effect of analyst follow-up on the relationship between relationship transaction and enterprise investment efficiency.The empirical results show that:(1)the relationship transaction will aggravate the inefficient investment.The existence of relationship transaction makes the information transparency and information asymmetry of enterprises decrease,and brings performance measurement and bargaining power decrease,which aggravates the inefficient investment of enterprises.The higher the concentration of suppliers/customers,the more critical the over investment and under investment;(2)the follow-up of Securities Analysts can weaken the relationship transaction Inefficient investment.Analysts can issue detailed reports on enterprises,speed up the flow of information,let stakeholders know the real business situation of companies,alleviate information asymmetry,and thus inhibit the inefficient investment of enterprises.In addition,analysts provide information for enterprises to design long-term incentive programs such as equity incentive,which can promote enterprises to improve executive compensation programs,thus alleviating performance measurement problems caused by relationship transactions,inhibiting executives'behavior of seeking their own interests through inefficient investment due to their efforts and return mismatches,and further inhibiting the enterprise's Inefficient investment.Considering that there may be some deviation when using Richardson model to measure the inefficient investment of enterprises.Therefore,this article uses"(current year's capital expenditure-last year's capital expenditure)/total assets at the beginning of the period" to replace "Investment",in which capital expenditure=cash paid for the purchase and construction of fixed assets,intangible assets and other long-term assets+net cash paid by subsidiaries and other business units-net cash recovered from the disposal of fixed assets,intangible assets and other long-term assets-net cash received from the disposal of subsidiaries and other business units,and substitutes it into Richardson model to recalculate the under investment and over investment.And replace the number of analysts who follow a company every year with the number of securities dealers corresponding to analysts who follow listed companies every year to re-measure analyst follow-up.The results are consistent with previous conclusions.The contribution of this paper is as follows:(1)in terms of content,the research results on relationship transaction and inefficient investment in this paper enrich the empirical evidence on the influencing factors of inefficient investment in China from a new perspective,and explore the ways and mechanisms of the supplier/customer relationship transaction to inefficient investment;(2)in terms of perspective,this paper focuses on the new perspective of analysts' follow-up The study of its impact on the relationship between relational transaction and inefficient investment broadens the research scope of inefficient investment.It provides a new perspective for further study of accounting information quality and management behavior,and provides a new countermeasure to restrain the inefficient investment brought by relational transaction.This paper also puts forward several suggestions:(1)enterprises need to pay close attention to the concentration of suppliers and customers.When the degree of supplier and customer relationship transaction is deep,the enterprise should increase the number of customers and suppliers,reduce the degree of concentration of customers and suppliers,and control the degree of concentration of customers/suppliers in an appropriate range by developing a variety of sales and procurement channels.Reduce the dependence of enterprises on suppliers and customers,so as to reduce the bargaining power of suppliers and customers.(2)pay attention to the executive compensation design system,introduce more diversified financial and non-financial indicators,building an effective long-term salary system,and reduce performance measurement issues.It is committed to the construction and maintenance of the manager market and other external regulatory markets,so as to make the external regulatory mechanism of enterprises more mature.