Ultimate Controller, Institutional Environment and Over-investment

This paper selects listed companies during 2011--2014 in China as samples, analyzes the current situation of China's listed investment companies, and based on this study, investigate the nature of ultimate controller and the impact of institutional environment on Chinese listed companies over-investment. The study shows: the worse the institutional environment, the more serious over-investment involved. Different types of ultimate controller will affect the relationship between the regional institutional environment and over-investment. When ultimate controller is the local government, the worse institutional environment, the more serious excessive investments in listed companies are. The regional institutional environment had no significant effect on the investment behavior of the central controlled listed companies. It follows that, improving the institutional environment will reduce the incidence of over-investment behavior and the local government will have a significant impact on investment decisions of listed companies controlled by it.