Abstract: Based on the theoretical analysis of sociology, political science and economics, this article researches the effect of social capital, political connection as well as its interaction term on the investment behavior of companies. Empirical findings include:the state-owned companies have effectively reduced the level of excessive investment with the increase of social capital. But there are no enough reasons to reckon that the non-state owned companies have also reduced their level of excessive investment accordingly. The political connection has improved the excessive investment behavior of the state-owned and non-state owned companies. In the context of political connection, social capital will restrain the company's excessive investment behavior. The influence of political connection on the over-investment of state-owned companies and non-state companies is more significant than that of social capital.

Key words: social capital, political connection, investment behavior