Using the sample data of listed companies from 2009 to 2014, this paper not only studies the reason of over-investment in state-owned enterprises from internal and external aspects, but also studies how ultimate controller influences the over-investment of state-owned enterprises. The results indicate that in the state-owned enterprises, over-investment still exists. Government intervention is the external factor which may lead to the over-investment of state owned enterprises and managerial entrenchment is the internal factor. Both of the two factors show a significantly positive correlation with over-investment. And the enterprises subject to the state-owned enterprises are inclined to over-investment, compared to the enterprises subject to government institution.