The investment incentive and performance of China's listed firms

The accessibility to funds and the financing cost varies for different enterprises. The financing cost has a great influence on the investment incentive of enterprises. When facing low financing cost, the enterprises can make profits even selecting the projects with low return, so low financing cost will stimulate the investment incentive and increase the investment scale. Through the analysis of the listed firms' investment incentives empirically, this paper points out that low financing cost has increased the firms' investment incentives, which, in turn, leads to the trend of underestimating risk and increasing the investment scale. The stock structure has a direct influence on the management, investment, and performance. This has made it necessary that the firms should change their stock structure and adjust their investment behavior.