A Study On The Impact Of Board Incentive On Inefficient Investment

As one of the troika of economic growth, investment activities in the development of enterprises has played a vital role. However, due to the separation of ownership and management rights, the principal-agent relationship, make enterprise investment deviation from the optimal state, appear inefficient investment behavior, mainly for over-investment and under-investment. Because there are "government intervention" and "insider control" in Chinese state-owned enterprises, show the excessive investment; the private enterprises due to funding constraints and policy restrictions, and there are serious lack of investment.The board of directors as the core of corporate governance, is shouldering the relief agency conflict between shareholders and managers. The board of directors’ main responsibility is to supervise and motivate managers.But the board of directors in our country the current operation can be to keep the enterprise value and cannot do appreciation, a large part of the reason is not enough incentive. Only reasonable and enough incentive, can make the board actively supervise managers take the initiative to find information, seeking to increase the value of the company’s investment projects, so as to improve the efficiency of the company’s investment, curb excessive investment, alleviate the underinvestment, achieve the goal of enterprise value maximization.In this paper, through theoretical analysis and empirical test, verify the board incentive effect on the efficiency of investment, embodied in: the board of directors of monetary compensation incentive can significantly improve the efficiency of corporate investment, curb excessive investment, alleviate underinvestment. However, the board of directors equity incentive for the efficiency of investment has no significant inhibitory effect, has aggravated the inadequate investment in the private enterprises. The equity incentive in China started late, has a lot to do with the capital market not mature enough. Additional equity incentive is not in the listed company for a wide range of use, the private enterprise is the main force of equity incentive, but its motivation between 30% focused on the board members, the motivation difference on the one hand can improve the control of the board of directors, on the other hand caused deterioration of two level difference, the operational efficiency of the board of directors, resulting in more serious lack of investment.