Abstract: This paper studies the relationship among soft budget constraint, pyramid structure and company’s investment efficiency based on the data of A-share state-owned listed companies from 2007-2011 through game theory and empirical research method. The research finds that the proportion of control right and ownership for ultimate controller in the pyramid structure and the degree of separation between control right and ownership exert significant influence on company’s investment efficiency under soft budget constraint. According to this result, the paper brings forward suggestions on state-owned assets supervision system and state-owned capital operating budget.
Keywords: Soft Budget Constraint, Pyramid Shareholding Structure, Over-investment, Underinvestment
source:Finance & Trade Economics ,No5,2013