Mixed Ownership,Internal Control And Inefficient Investment

Future value of an enterprise is determined by its investment efficiency.Many factors such as entrusted agency,information asymmetry,and managerial characteristics may lead to inefficient investment behavior of the enterprise.The problem of low investment efficiency is common in many Chinese enterprises,in which case restricting the inefficient investment is one of the most important issues in corporate governing.Through a series of effective incentive,supervision and restraint systems,internal control can regulate the behavior of managers,thereby reducing agency costs,easing information asymmetry,and improving the scientific nature of corporate investment decisions.At this stage,the reform of mixed ownership of state-owned enterprises in China has been deepened continuously.In 2013,the State Council issued the "Suggestions on the Development of Mixed Ownership Economy of State-owned Enterprises".The reform of mixed ownership of state-owned enterprises has entered a period of substantial reform.Thus,this paper focuses on the relationship between mixed ownership,internal control and inefficient investment.Using a sample of 884 A-share listed companies in China from 2013 to 2018,this paper constructs an mediation effect test model of internal control,and empirically analyzes and examines the relationship between mixed ownership and enterprise inefficient investment behavior,the impact of mixed ownership on internal control,and the relationship between internal control and mixed ownership mediation conduction effect.The research shows that:(1)There is a significant negative relationship between equity mixing and inefficient investment,indicating that the higher the level of equity mixing in China 's mixed-ownership enterprises,the more effectively it can suppress the inefficient investment behavior of the enterprise;(2)There is a significant positive relationship between equity mixing and the quality of internal control,which means,the higher the level of equity mixing,the higher the quality of the company's internal control is;(3)Internal control plays a part of the mediation effect in the inhibition of inefficient investment by the degree of equity mixing.This inhibitory effect will be magnified by internal control.As a result of the degree of equity mixing,the quality of internal control also has a certain impact on the inefficient investment behavior of the enterprise.(4)After the mixed reform,the state-owned shares maintain a relatively controlled mixed ownership,and the mixed degree of equity can play a significant positive role in improving the internal control quality and investment efficiency of the enterprise.In response to the research results,this paper proposes the government loosen up access conditions for non-public capital,continue the reform of mixed ownership for state-owned enterprises,so as to stimulate non-state shareholders;As for the mixed ownership enterprises,stronger internal control is proposed to improve the investment efficiency.