| Abstract | Environment uncertainty makes the prediction for the firm’s prospect be more difficult. The managerial behavior is more difficult to observe and monitor. According to financial constraint and agency theory, environment uncertainty will reduce the investment efficiency. Because of the difference in the resource acquirement and operating goal between state-owned and non-state owned company, the effect of environment uncertainty on investment efficiency maybe different. This paper tests the effect of environment uncertainty, ownership structure and their interaction on the investment efficiency. Results show that environment uncertainty will reduce the investment efficiency; the state-owned companies are associated with under-investment, while the non-state-owned companies are associated with over-investment. Further studies show that in the non-state-owned companies, environment uncertainty will decrease firm value, and the underinvestment will mitigate the effect; but in state-owned companies, the effect of environment uncertainty on firm value is not significant, the overinvestment interact with environment uncertainty probably decrease the firm value. This paper reveals the effect of environment uncertainty and ownership structure on investment efficiency. It distinguishes the effect of financial constraint and agency problem, expecting for reform of capital market and make regulation to resolve the financial constraint in the future. These results will assist stockholders in understanding and resolving agency problem, provide base for the reform of state-owned firms, and assist investors in making decision. |