Abstract
This paper studied the over-investment caused by free cash flow from the perspective of ownership concentration. The study found that the existence of significant positive correlation between over-investment and free cash flow which confirms the free cash flow hypothesis. Ownership concentration is negatively correlated with excessive free cash flow of the company. Ownership concentration can effectively inhibit excessive investment caused by free cash flow. The above study not only provides empirical evidence for the explanation of over-investment caused by agency problems, but also provides a useful reference for the ownership concentration of listed companies which is most conducive to improving corporate governance after the completion of the ownership division reform.
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