Environmental Regulation,Ownership Structure And Inefficient Investment

In recent years,the state and the society pay more attention to environmental protection and governance issues.The government and related departments have issued a series of environmental regulation policies for listed companies.Including laws and regulations such as the environmental protection law,mandatory systems such as standards for controlling total pollutant emissions,and encouraging policies such as compensation and subsidies for investment in energy-saving ecological projects.These environmental regulation policies play an important role in enterprises’ production and operation,investment decision-making,external financing and assets liquidation value.As one of the important financial strategies of an enterprise,the efficiency of investment decision determines whether the enterprise can win the advantage in the fierce market competition.The phenomenon of inefficient investment not only damages the value of the company but also hinders the long-term development of the enterprise.The 13th five-year plan still emphasizes the concept of effective investment,believing that enterprises should try their best to invest in ecological and environmental investment projects with high long-term returns and in line with future development.Therefore,it is of great significance to study the impact of environmental regulation as an external factor on inefficient investment.On the basis of information asymmetry theory,principal-agent theory,externality theory,legitimacy theory and stakeholder theory,this paper proposes hypotheses and constructs models.This paper mainly selects Shanghai and Shenzhen a-share manufacturing companies listed in the five-year period from 2013 to 2017 as the research samples,first used Richardson model to measure the degree of inefficient investment,and then tested the relationship between environmental regulation,equity structure and inefficient investment.The results show that there is a significant negative correlation between environmental regulation and inefficient investment,that is,environmental regulation can restrain the excessive investment and alleviate the inadequate investment behavior.The nature of state-owned property will weaken the restraining effect of environmental regulation on inefficient investment,including the restraining effect on excessive investment and the mitigating effect on inadequate investment.The improvement of ownership concentration will weaken the restraining effect of environmental regulation on inefficient investment,and the weakening effect on environmental regulation and inadequate investment is greater than the weakening effect on environmental regulation and excessive investment.The improvement of equity incentive will strengthen the inhibitory effect of environmental regulation on inefficient investment,including promoting the inhibitory effect on excessive investment and the mitigating effect on inadequate investment.According to the above research results,the impact of environmental regulation on enterprise investment decisions should not only be the government’s mandatory requirement that enterprises’ investment behaviors conform to the requirements of relevant environmental protection policies,but also the enterprises themselves should have environmental awareness,standardize their business decisions and investment behaviors,and establish a good social image.Firstly,the government should make comprehensive use of a variety of environmental regulation means,pay attention to the complementary effects of different types of environmental regulation tools,and at the same time appropriately enhance the intensity of environmental regulation,so as to improve the effect of inefficient investment.Secondly,enterprises need to enhance their awareness of social responsibility,take the initiative to assume the responsibility of environmental protection,and make full use of the preferential policies given by the government on environmental protection to invest in projects with low production costs and rich profits.Finally,enterprises should pay attention to the rational allocation of equity structure.As the core of corporate internal governance,scientific and reasonable equity structure can promote the effective allocation of resources and help companies make better investment decisions.