Institutional environment's effect on the investment efficiency of listed companies

Using the data of China's listed companies during 2001 to 2008, this paper investigates and analyses the influence of institutional environment on corporate investment efficiency. This paper explores the issues that marketization index and government intervention index can effectively inhibit listed companies' over-investment impulses in various regions, indicating that the differences in the degree of intervention made by local governments in the regions have different economic consequences. However, regional rule-of-law level can not have an effective impact on the company's over-investment. These evidences all provide a new way of thinking for improving listed companies' investment efficiency in China. © 2012 Springer-Verlag GmbH Berlin Heidelberg.