Abstract: Taking A-Share listed companies as research samples, this paper constructs overcapacity variables according to the list of backward enterprises with overcapacity in different industries published by the Ministry of Industry and Information Technology from 2009 to 2015. The double difference model is employed to investigate the impact of industrial policies on the investment efficiency of the enterprises with overcapacity. It is found that industrial policies have a regulatory effect on the investment efficiency of the enterprises with overcapacity. Further analysis shows that the regulatory effect is more significant on the non-state-owned enterprises, government-business irrelevant enterprises, and enterprises with high concentration of equity. As to the robustness, industrial policy mainly affects investment efficiency through government subsidies and mergers and acquisitions, and the research conclusion is still robust if the explained variable is replaced. The study not only helps us better understand the problem of enterprise overcapacity under the “new normal” of China’s economy and explore the mechanism restricting the investment efficiency of enterprises, but also provides theoretical basis for policy-making in overcapacity cutting, supply-side reform and economic transformation.

Key words: industrial policy, overcapacity, over-investment, investment efficiency