Research On The Influence Of Enterprise Internationalization On Investment Efficiency

As an important business decision,investment decision covers many aspects of the regular operation of an enterprise.This includes the allocation of resources and the choice of development strategy,which are related to the survival and development of the enterprise,hence the investment efficiency is vital to the long-term healthy development of the enterprise.Within the context of global economic integration,more and more Chinese enterprises are responding to the call of the national "going out" policy and actively participating in the international market competition,expecting to obtain abundant resources,advanced technology and broad market through overseas business development,which ultimately leads to an improvement in their comprehensive competitiveness.However,in the process of overseas business,due to the expansion of the business market from the limited domestic market to the diversified international market,enterprises are faced with various challenges such as cultural conflict,system differences and deficiency of social connections,etc.Especially in recent years,there have been a lot of global trade frictions and an uprising trend of trade protectionism,resulting in many enterprises’ overseas business being frustrated.Under such circumstance,the internationalization of enterprises’ business will naturally affect their investment decisions,which will have an impact on their investment efficiency.In order to explore the impact of the degree of internationalization on investment efficiency,this paper conducts a theoretical analysis based on previous studies and related theories,and uses historical data of China’s listed companies from 2008 to2019 as a research sample to prove the hypothesis proposed in this paper empirically,and then further investigates the transmission mechanism of this impact from the perspective of the risk-taking level of enterprises and principal-agent problems on this basis,and conducts a heterogeneity analysis from three perspectives: financial flexibility,diversity of board function background and executive shareholding.Based on the theoretical analysis and empirical results,this paper draws the following conclusions:(1)The increase of internationalization will lead to the decrease of investment efficiency.Distinguishing between the types of inefficient investment in firms reveals that this effect is present in both over-invested and underinvested firms;(2)Throughout the transmission mechanism,it has been proven that the increase of internationalization will reduce the investment efficiency of enterprises by increasing the risk-taking level of enterprises and aggravating the principal-agent problem,and the above two transmission mechanisms hold for both over-invested and under-invested firms;(3)The heterogeneity analysis reveals that the adverse effect of internationalization on investment efficiency is lower in firms with higher financial flexibility,richer functional background of the board of directors and higher shareholding of executives,and with further distinguishment in the types of inefficient investment,it has been noticed that the difference in the impact of internationalization on investment efficiency triggered by different degrees of financial flexibility among firms exists only among underinvested firms,while the difference in the impact of internationalization on investment efficiency triggered by different functional backgrounds of boards of directors and different percentages of executive shareholding among firms exists both among overinvested firms and among underinvested firms.Based on these findings mentioned above,this paper has offered recommendations from the perspectives of firms,regulators,and governments.The findings of this paper,from the theoretical aspect,enrich the research related to the international operation and investment efficiency of enterprises by conducting a comprehensive analysis of the impact of the degree of internationalization on investment efficiency,and provide a new perspective for subsequent research;from the practical aspect,the research content of this paper provides effective suggestions for enterprises to conduct overseas business more efficiently,and for regulators and government to better supervise and guide Chinese enterprises to compete in the international market.