Research On The Influence Of Executive Compensation Incentive On Non-efficiency Investment

Investment is an important motive force of macro-economic growth in our country and is also the foundation of the future development and value promotion of micro enterprises.However,the high investment in the macro level and the non-efficiency investment at the micro level coexist.The ubiquitous non-efficiency investment listed in Chinese companies not only damages the wealth of shareholders,but also hinders the sustainable development of enterprises and further affects the growth of national economy.According to the theory of principal agent,in the modern enterprise system of separation of two rights,principal-agent conflict is an important reason of non-efficiency investment in enterprises.As the interests of shareholders and managers are not consistent,the executives driven by the motives of "empire building" and "manager defense" seek personal gain through inefficient investment behavior.As the core mechanism of corporate governance,executive compensation incentive is considered to be an important means to alleviate the principal-agent conflict between executive and shareholders.By verifying the relationship between executive compensation motivation and enterprise performance,scholars have confirmed that China has basically constructed the executive compensation incentive system based on the enterprise performance."Zero Salary" and "Sky Price Compensation" exist side by side in practice and the incentive system of executive compensation is still not perfect.So,is the incentive system of the executive compensation of listed companies in our country has the appropriate governance effect on the non-efficiency investment of the enterprise?In addition,under the special economic background and system environment of our country,the executive power has its own special breeding soil.During the reform of state-owned enterprises,with the decentralization of government power,the executive power is expanding increasingly and then the serious internal control problem is derived.The expansion of the power of the executive leads to the motive of rent-seeking and the investment behavior of the enterprise is reduced to the reasonable means of power rent-seeking.So,does the executive power intensify the enterprise non-efficiency investment?And whether the effect of executive compensation incentive on non-efficiency investment is influenced by executive power?In addition,the investment decision is not only influenced by the internal governance mechanism of the enterprise and the external system environment,but more importantly,it is influenced by the personal motivation of the decision maker,and the executive undoubtedly plays an important role in the formulation and implementation of the company investment decision.The executive decision-making motivation determines the investment behavior of the executive and the career concern as the internal recessive feature has an important influence on the decision-making motivation of the executive,thus affecting the behavior of the executive investment.What is the influence of executive career on non-efficiency investments in the enterprise?And how does the executive career attention affect the inefficiency investment of enterprises and the relationship of executive compensation incentive and the non-efficiency investment?The theoretical research on the influence of executive compensation incentive on enterprise non-efficiency investment has the following shortcomings as a whole.On the one hand,there is not a analysis framework of the system,mostly from the executive monetary compensation or equity incentive index to conduct the research.So,there is a certain one-sidedness.On the other hand,in the aspect of study conclusion,no consensus has been reached,mainly due to the fact that the present study is mostly focused on the simple binary analysis framework:executive compensation incentive and investment behavior.And regards the executive as homogeneous,lacks the consideration of relevant situation factors,then the study does not open the "Black Box" and the action path of relationship between executive compensation incentive and enterprise non-efficiency investment.Based on these,this paper adopts the Chinese A-share listed companies in 2012-2016 as samples.Synthesize the theories of comprehensive principal agent theory,optimal contract theory,executive power theory and career concern,combining with the method of empirical analysis.Study the influence of executive compensation incentive on non-efficiency investment of enterprises from two perspectives:executive external governance features:executive power and the executive internal feature:career concern.On the basis of combing and reviewing the present research status at home and abroad,the thesis expands the research on the following five parts.Firstly,the key concepts are defined and the theoretical basis of the study is analyzed.This paper defines the executive as the agent undefineds identity,mainly refers to the senior management personnel including the general manager,the deputy general manager,the secretary of the board of directors,the finance director,etc.,excluding the personnel at the level of the director and the supervisor.lt defines the enterprise non-efficiency investment as the degree to which the investment of the company deviates from the optimal investment level.The executive power is defined as the comprehensive ability of the executive to carry out its own will under the condition of internal and external governance and supervision mechanism of the company are not perfect.Mainly refers to the ability to produce some expected effect on salary establishment,enterprise strategic decision and so on.According to the research institute of this paper,the relevant theoretical foundation is introduced.Secondly,the relationship between executive compensation incentive and non-efficiency investment from the perspective of executive power and career concern is studied theoretically,a unified analysis framework is formed and corresponding theoretical assumptions are put forward.Based on the theory of principal agent and the theory of optimal contract,the influence mechanism of enterprise compensation incentive on non-efficiency investment is analyzed from four dimensions:monetary compensation,equity incentive,compensation structure and the synergy effect of compensation.On the basis of theory of executive power,combining the dual roles of"agent" and "steward" of executive,from the three dimensions of executive power:executive ownership power,executive structural power,executive expert power,deeply analyze the influence of executive power on non-efficiency investment and the regulating effect of the relationship between executive compensation incentive and enterpriseundefineds non-efficiency investment.On the basis of career focus theory,the enterprise career concern is divided into three stages:high,middle and low and deduces its influence on enterprise non-efficiency investment and the regulating effect of the relationship between executive compensation incentive and enterpriseundefineds non-efficiency investment.Based on this,the paper puts forward the research hypothesis of the thesis.Thirdly,the measurement of the variable and the construction of the research model.In terms of variable measure,because the dependent variable is enterprise non-efficiency investment,using the residual of Richardson model to measure.The independent variable is executive compensation incentive,including the executive monetary compensation,the equity incentive and the executive compensation structure.The adjustment variable is executive power and career concern,the power of the executive is divided into the executive structure power,the ownership power and the expert power and the age is adopted as the agent variable of the career concern.And meanwhile,control the company growth,enterprise performance,cash flow,size,management fee,large shareholder and property right,the year and industry are controlled at the same time.According to the theoretical analysis and research hypothesis of the previous chapter,the multiple regression model is constructed.Fourth,empirical research.Firstly,the variables are analyzed by descriptive statistics.Secondly,the correlation analysis is carried out on the variables,preliminary verification of the rationality of theoretical model construction.Thirdly,using STATA14.0 to perform multiple regression analysis,the following conclusions are drawn:from the main effect,the executive monetary compensation has eased the non-efficiency investment behavior of the enterprise;there is a significant U-type relationship between executive equity incentive and non-efficient investment of enterprises;the executive compensation structure relieves the non-efficiency investment phenomenon of the enterprise;the synergistic effect of the executive monetary compensation and the equity incentive reduces the non-efficiency investment degree of the enterprise.From the adjustment effect of the executive power,the power of the executive structure exacerbates the non-efficiency investment of the enterprise and weakens the governance effect of the executive compensation incentive on the non-efficiency investment;the ownership power of the executive also deteriorates the non-efficiency investment of the enterprise and restrains the effect of executive compensation incentive on non-efficiency investment;the power of executive experts has eased the non-efficiency investment of enterprises and strengthened the governance role of executive compensation incentive on non-efficiency investment.From the adjustment effect of career focus,when the executive career concern is high or low,the enterprise non-efficiency investment phenomenon is more serious and the effect of executive compensation incentive on the non-efficiency investment is suppressed.When the executive career concern degree is at medium level,the non-efficiency investment of enterprise is alleviated,and the effect of executive compensation incentive on non-efficiency investment is strengthened.Finally,a robust test was conducted to study the internal problems by using the first-stage explanatory variables to control the internal problems and replaced the variable and found that most of the test results were consistent with the previous ones.Fifth,study conclusion and enlightenment.Based on the conclusion of this study,found the deficiency of the study and combined with the specific situation of our country,putting forward some suggestions on improving the incentive system of the executive salary of listed companies in our country,strengthening the supervision and restriction of the executive power in order to provide reference for the governance of non-efficiency investment of listed companies in our countryThe research contributions of this paper are:Firstly,enrich and developed the research on incentive effect of executive compensation.From the four dimensions:executive monetary compensation,equity incentive,compensation structure and synergistic effect to analyze the essence process of executive compensation incentive to the enterprise non-efficiency investment behavior deeply and it is a useful supplement to the research of executive compensation incentive effect.Secondly,it fills the gap between executive compensation incentive and corporate investment behavior,enriches and expands the theory of enterprise investment.From the perspective of the internal and external characteristics of the executive,the two-component analysis framework on the incentive and non-efficiency investment of executive compensation is abandoned and the two paths of action of the non-efficiency investment behavior of the enterprise are explained from the perspective of the internal and external characteristics of the executive.The system constructs the unified analysis framework of executive compensation incentive,executive power,career concern and enterprise non-efficiency investment,which enriches and expands the enterprise investment theory.Thirdly,the theory of executive power is enriched and broke through the perspective of executive power agent.By dividing the executive power into three dimensions,it is found that executive power plays a different role in different power dimensions and the executives often act as"agents" driven by ownership power and structural power.However,driven by expert power,it is more "steward".The research deepens and expands the theory of executive power.