| Investment is one of the "troika" that stimulates economic growth,its role in economic development in China is especially important,which serves as the driving force for the rapid economic growth for more than 30 years.Statistics show that from 1981 to 2015,China's economy and investment are showing rapid growth trend,China's GDP growth rate is up to 9.77%,while the annual growth rate of fixed asset investment is also up to 21%.However,the essence hidden in the phenomenon of high investment and high growth in the macroeconomics is the low efficiency of enterprise investment.The reason is the separation of ownership and management of modern enterprises,which leads to the conflict between shareholders and managers.Therefore,the pursuit of maximizing personal gains leads the executives to use their power to alienate the investment behavior of enterprises and adopt an inefficient investment behavior.As an essential supplement to the incomplete contract of the enterprise,internal control is a kind of institutional arrangement and control mechanisman in order to realize the organizational goals,coordinate and safeguard the interests of the stakeholders and avoid the conflicts of interest,which is an important part of the internal governance of the company.Our internal control has gone from scratch,from disorder to norm,from voluntary to compulsory.Patterned from the "Sarbanes-Oxley"bill from America,China in 2008 and 2010 has respectively issued "The Basic Norms of Internal Control" and "Supporting Guidelines of Internal Control",requiring listed companies to disclose annual internal control self-evaluation report and internal control audit report.All of these marks that China has established the basic system of internal control,and entered into the stage of mandatory disclosure of the internal control of the listed company in China.Therefore,the governance mechanism of internal control in the company's investment and the effect of governance have become the focus of attention,and it has become an important part to test the effect of the basic norms of internal control.In the "emerging" plus "transition" of the economic market,government regulation is a major feature of economic development.With the deepening of the reform of rights and interests,the government control model has changed from the"administrative intervention" into "supervision",which gives the corporate management more decision-making discretion and further strengthen the power of executives.In order to pursue private benefit of corporate control,the executives would add their individual to the company's investment decision-making,which consequently worsen the inefficient investment of the enterprise.Therefore,the government regulation is not useless,which can limit the abuse of managerial power of listed companies,restrain the opportunism behavior of executives in investment decisions,and reduce the occurrence of inefficient investment.From the regional market environment point of view,due to China's long-term economic development of the "gradient development strategy",the regional economic development level is uneven and of great differences.The uneven process of marketization caused the levels and great differences in competition,and thus the different constraining function to the managerial power.From the perspective of capital market environment,due to the lack of perfect legal protection system for enterprise stakeholders,institutional investors,as an important force of external governance,play a positive role in enhancing the level of corporate governance,effectively supervising and restricting managerial power,improving the efficiency of investment,and protecting the interests of minority shareholders.Recently,there is struggle of vanke&BAONENG and the event of QHL and GREE in the capital market.Institutional investors show the destructive power to the business and the market order.Therefore,the institutional investors,as the main force of capital market participation,is appealing an increasing attention for its role in corporate governance and capital market.This paper,based on the data of A-share listed companies in Shanghai and Shenzhen in 2007-2014,uses the combined method of theoretical analysis and empirical research to examine the impact of managerial power on investment efficiency from the perspective of internal and external governance.First of all,the principal-agent theory and asymmetric information theory are used to analyze the causes of inefficiency investment.Secondly,incomplete contract theory,principal-agent theory,information asymmetry theory,stewardship theory,and incentive theory are used to explain the impact of executive power on investment efficiency.Then,considering the internal and external governance mechanism,constructs a theoretical model,collects the data,uses descriptive statistics,principal component analysis,multiple regression,group regression and carries on an empirical study of the hypothesis test.Meanwhile,the robustness test is carried out by transforming the sample,the double sample T test and the tendency matching method.Finally,it puts forward some relevant policy suggestions on the problems of investment behavior under the managiral power of listed companies in China.The specific research contents are as follows:Firstly,the division and test of managiral power.According to Adams(2005)and the view of Fayol,managerial power is divided into two categories,formal and informal.Formal power comes from institutional,organizational and other arrangements,informal power is based on the knowledge,information,experience,charm of executives.Using the four dimensions of Finkelstein(1992),Kim(2011)puts forward a three-dimensional view,which divides the managiral power into the following three dimensions:ownership power,organizational power and personal power.Different ownership arrangements will affect the internal organizational structure of the enterprise,the board of directors' system,and thus affect the power of executives.In order to reflect the ownership arrangements,ownership concentration and equity balance is used as the proxy indicator of executives ownership power.Executives organizational power is given by the bureaucratic organization,therefore,variables of corporate governance structure-CEO duality,board size,proportion of independent directors and supervisors size is used as the proxy indicator of executives organizational power.Personal power includes expert power and reputation power.Expert power is based on the formation of executives knowledge,information,experience,etc.,reputation power is based on executives reputation,prestige,personal charm and so on.Therefore,variables of executive ability-CEO tenure,executive part-time,internal promotion and political capital is used as the proxy indicator of executives personal power.Based on the empirical data of listed companies,the relationship between 10 agent indexes and investment efficiency in three dimensions of managerial power is verified.Among them,ownership concentration,equity balance,board size,proportion of independent directors,supervisors size,CEO tenure,executive part-time and political capital are validated,which have a reasonable effect on the investment efficiency.Secondary,based on the double humanity hypothesis of the executive investment behavior analysis and validation.The traditional executive behavior studies suggest that executives can only choose a single role of agent or steward,or executives as an"economic man" out of the agent's selfish motive chase the principal agent benefits and information asymmetric gains,take inefficient investment behavior;or executives as a"social man" driven by social and achievement motivation,choose the role of steward to carry out the efficiency investment and achieve organizational performance.Tosi(2003)argues that agent theory and stewardship theory can be integrated in interpreting executive behavior.Because agency theory only emphasizes the economic side of the human nature of the executive and ignores the social side of the human nature of the executive,the stewardship theory is necessary and useful supplement of it.Enterprise as a collection of contracts,the logical starting point is the "economic man" hypothesis,so ownership power and organizational power came from institutional and organizational arrangements are easier to induce executives to select the role of agents.The pursuit of maximization of personal interests will lead to imperial construction,opportunism,managerial entrenchment,abuse of free cash flow and other inefficient investment behavior.As a "social man",executives personal power formed from personal skills and reputation makes executives more easily perform housekeeping functions.The pursuit of organizational performance and personal fulfillment will lead to efficient investment.All the hypotheses are verified in the dimension of managerial power and inefficient investment:(1)Executives ownership power is positively related to the degree of inefficient investment.(2)Executives organizational power is positively related to the degree of inefficient investment;(3)The power of personal ability is negatively correlated with the degree of inefficient investment.It is proved that executives who tend to use formal power(ownership power,organizational power)are more likely to perform the role of an agent in the process of investment decisions,and invest inefficiently at the expense of the interests of shareholders;executives who tend to influence the members of the organization and the decision-making through the power of the individual ability,more likely to fulfill the functions of the steward,and take effective investment in line with the interests of the organization.Finally,according to the eight proxy variables previously validated,the principal component analysis method is used to generate the managerial power index,which verifies the relationship between the managerial power and the investment efficiency.The results show that inefficient investment is positively related to managerial power.Thirdly,the model of managerial power and investment efficiency under the dual internal and external governance is constructed and verified.After analyzing the influence of managerial power and its dimensions on the efficiency of enterprise investment,this part mainly analyzes how internal and external governance mechanisms affect the relationship between managerial power and inefficient investment.As an internal institutional arrangement and governance mechanism,internal control can control the environment,risk assessment,control activities,information communication and supervision,effectively supervise and restrict executives as agents of "economic man",and suppress executives be inefficient investment behavior of selfish motives.At the same time,good internal control is helpful in the enterprise investment decision-making to achieve the goals of the executive "steward" behavior and inhibit the operational inefficient investment by executives,thus to improve investment efficiency.According to the view of the new institutional economics,the external institutional environment impacts shaping the internal contractual arrangements.The effect of external institutional environment on the alienation of investment behavior caused by managerial power is manifested in three aspects:First of all,the government's supervisory mechanism for enterprises can be used as an alternative mechanism for the failure of corporate governance mechanism and constrain executives' abuse of power to make inefficient investments in self-interest motives;Then,through the product market,the factor market(mainly the manager market)and the legal system environment,the regional marketization can regulate the abuse of the managerail power and improve the efficiency of the enterprise investmentthe;At last,from capital market point of view,institutional investors,as the main force of external governance in the capital market,can directly participate in corporate governance or indirectly through the market for corporate control market to participate in corporate governance and investment decisions.Thus,it can restrict the managerial power on inefficient investment.(1)Internal control can mitigate the positive influence of managerial power on inefficient investment,further,internal control can alleviate the inefficient investment caused byexecutive ownership power and organizational power,and the moderating effect of internal control on the relationship between executive personal power and inefficient investment is not verified.(2)According to the nature of property rights,the positive effect of managerial power on inefficient investment is still significant.Compared with state-owned enterprises,the positive effect between managerial power and inefficient investment is stronger in non-state-owned enterprises.It is proved that the existence of government regulation can restrain the positive correlation between managerial power and inefficient investment.Further,government regulation can restrain the inefficient investment caused by executive organizational power,and enhance the efficiency investment caused by executive personal power.(3)The regional market environment has a negative moderating effect on the relationship between managerial power and inefficient investment,that is,marketization can restrain the positive influence of managerial power on inefficient investment and its governance play mainly through the suppression of executive ownership power on inefficient investment.(4)Institutional investors negatively moderate the relationship of managerial power and inefficient investment,its governance role is mainly by inhibiting executive ownership power and organizational power to inefficient investment,thereby enhancing investment efficiency.(5)Fund holdings has a negative moderating effect on the relationship between managerial power and inefficient investment,that is,the higher the proportion of fund holdings,the more able to curb managerial power on inefficient investment,and its governance play mainly through restraining the positive influence of executive ownership power and organizational power on inefficient investment.(6)Pressure-resisting institutional investors negatively moderate the relationship of managerial power and inefficient investment,and its governance role is mainly by suppression of executive ownership power and organizational power on inefficient investment,enhancing the efficiency investment caused by executive personal power.This paper has the following contributions to the existing research:(1)Constructing the multidimensional index measurement system of managerial power,and providing the basis for scientifically measuring the structure and intensity of managerial power.Abandoning the practice of measuring managerial power with a single index,porting the managerial power from different dimensions,and providing useful exploration for the measurement of managerial power.At the same time,we can deep into the managerial power structure from the different aspects to examine the business investment.The research conclusions is more targeted and practically significant of impact of efficiency to improve the efficiency of business investment.(2)Based on the double hypothesis of "economic man" and "social person",establishing a logical model of managerial power ? behavior(driving)? investment efficiency.This paper starts with the hypothesis of "economic man" and "social person' as the starting point,and combines principal-agent theory,information asymmetry theory,incentive theory and stewardship theory to explain the investment behavior under the managerial power,which will further enrich the existing managerial power theory and develop new ideas for managerial power and investment efficiency research.(3)enriching the theory and practice of institutional investors' governance by digging into the holdings characteristics of institutional investors and comparing the mechanism and effect of heterogeneous institutional investors involved in corporate governance.Because of its shareholding ratio,holding motives,and the relationship with the invested enterprises,the governance mechanism and governance effect of institutional investors are different.Based on the heterogeneity of institutional investors,this paper analyzes the differences in the mechanism and effect of investment efficiency,and provides new ideas and suggestions for institutional investors to play an active role in governance. |
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