A Study On The Effect And Mechanism Of Managerial Ability On Enterprise Investment

As one of the three major financial activities,investment decision is the most critical and most important decisions in the company's decisions.Therefore,how to make investment decision and what factors will affect the investment has become an important,hot and complicated topic in the academic filed,and also become a practical problem in making investment decisions in reality.With the development of management and economics,the measurement of managerial ability and its influence on enterprise's strategic decision,technical decision,marketing decision,financial decision and so on are attracting more and more attention.In the process of sustainable growth of the enterprise,the managers how to utilize their talents to pull together internal and external information,to grasp fleeting investment opportunities in the fierce product competition,and to get access to financial resources needed for the development of an enterprise through various mechanisms(market and non-market)is of vital importance.Although intuitive judgment,higher managerial ability will inevitably have a positive and beneficial impact on investment,but what are the implications?investment scale,investment performance or investment direction?It lacks empirical analysis and lacks research on the mechanism of action.Under such a background,the author makes the following research work on the basis of summarizing the existing literature on the relationship between managerial ability and investment decision:First,based on Demerjian et al.(2012)managerial ability of model,combined with the institutional environment of China's listed companies,the paper adds the factors of property rights and fiscal policy?monetary policy and industrial policy,calculate the operational efficiency of listed companies by using input and output data,calculate the managerial ability.On the basis of the above analysis,the paper analyzes the heterogeneity of the managerial ability of the listed companies according to the regional dimension,the time dimension,the industry dimension and the nature of the actual controller.So as to provide the basis for the following study.Second,on the basis of the neoclassical investment model,the paper adds the variable of managerial ability to study the influence of managerial ability on the investment style,investment scale and investment performance.The results show that the management ability can significantly improve the scale of investment.Further analysis shows that managerial ability can improve investment performance.If investment activities are classified as investment in fixed assets and investment in R&D,we find that the managerial ability will increase the scale of investment in fixed assets,but will reduce investment in R&D.Third,from the perspective of resource acquisition,study the mechanism of managerial ability on enterprise investment.Investment cannot be separated from financing,but in reality,many companies have to give up some good investment projects because of financing constraints.Therefore,it is very important to obtain resources through various mechanisms to meet the investment needs of enterprises.Based on classical investment sensitivity to cash flow model,through add the interaction between managerial ability and cash flow,in order to test whether the managerial ability can reduce the investment sensitivity to cash flow,thus easing financing constraints.The research shows that the managerial ability can reduce the investment sensitivity to cash flow,and the function has some differences in the area,industry,time and the nature of the ultimate controller.Fourth,from the perspective of information acquisition,study the mechanism of managerial ability on enterprise investment.The investment decision of enterprise is a very complicated process.In the process of searching and determining investment projects,the cost and information have a direct impact on the size of the investment and investment performance.It is also very important to the investment decisions whether managers can get information on project as much as possible.Therefore,based on investment sensitivity to stock price model,through add interactive between managerial ability and the stock price,we test the managerial ability will help get more investment information.The research shows that the higher managers can get more information about the investment.of the enterprise,and reduce the sensitivity of the stock price.Fifth,today,M&A increasingly become the most important investment activities,under the background of integration between industry and capital,It provides an excellent test of the impact of managerial ability on enterprise investment.In this paper,the interaction between managerial ability and M&A behavior is used as the main explanatory variable,we test the influence of managerial ability on the performance of M&A,through the mixed regression model and panel data model.The study found that although the management ability in general helps to improve the performance of the enterprise,but because of the differences in the nature of the region,industry,time and the nature of the ultimate controller,the direction and degree of the impact is also quite different.The conclusion of this paper further deepens the understanding of the relationship between the managerial ability and the investment decision,and has the theoretical significance for the scientific hiring managers,the establishment and improvement of the manager market.Although the main conclusions of this paper are consistent with expectations,but in the test for heterogeneity,we also found different and even opposite conclusions,when we examine subsamples from some dimensions,such as time,area and controller attribute,these differences are also worth in our further thinking and study.