Research On The Influence Of Managerial Ownership On Inefficient Investment Of Enterprise

In the modern theory of financial management, investment decision-making is the logical starting point of the financial decisions. The validity of the investment behavior have a direct bearing on the company's operating risk, the level of profits and the evaluation from the capital markets for its operating results and future performance. Then it related to the realization of enterprise value maximization objective. In reality, many companies'investment decisions are often contrary to the target of maximize the value, which makes actual investment expenditures deviate from optimal investment scale with appearing inefficient investment behavior:under-investment or over-investment. Under-investment is making a lot of idle funds which slows down the growth of companies. Over-investment can lead to huge capital precipitation in the area of excess capacity, resulting in waste of resources and factors of production. Inefficient investment behavior has seriously constrained the long-term development of enterprises, and damaged the interests of investors. meanwhile the validity of the companies'investment in micro level affects the efficiency of the national economy and the competitiveness in the international market, thus how to inhibit the company's inefficient investment behavior is the problem which people have to think about. With the emergence and development of managerial ownership, the role that managerial ownership plays in easing agent conflicts between shareholders and managers become the focus of academic study. Inefficient investment behavior is to a large extent a manifestation of the agency costs which is resulted by agent problems, therefore, managerial ownership also became one of the effective research on inefficient investment behaviorIn the mature markets of Europe and other countries, managerial ownership has achieved great development. It started relatively late in our country.In the 1990s a few enterprise gradually began to implement managerial ownership, but its promotion and development had been restricted because the relevant regulations and rules for the implementation was not improving. Until 2006 with the successful completion of split share structure reform and the implementation of the new laws in our country, the managerial ownership has great development. In the background of our managerial ownership increasingly perfect, this article start from the foundation cognitive on non-efficiency investment and managerial ownership, review past related research literature and summary out the multiple effect of managerial ownership and multiple factors affecting inefficient investment, then research the managerial ownership how to effect on inefficient investment behavior by the method of theory analysis and empirical test.In the empirical studies, this article select from 2007 to 2009 in Shanghai and Shenzhen a-share listed companies (except the financial sector) for the sample, set of three layers of progressive model, using descriptive statistics and regression analysis method to comprehensively analysis the relationship between managerial ownership and inefficient investment. Study results show that there is prevalence of inefficient investment behavior of listed companies in China; most enterprises are performance for under-investment. In China, the effect of managerial ownership on inefficient investment is Limited, but the managerial ownership can effectively reduce the cash flow sensitivity of the inefficient investment, in addition, relative to the State-owned holding enterprises, the inhibition effect of management holding on enterprise' inefficient investment is even more apparent in non-State-owned holding enterprises.This article is divided into five major sections as follows:The first part is the introduction. This part introduces research background, research significance, research methods, research ideas and main contents. EtcThe second part is summary of the literature. This section reviews the research literature about the managerial ownership and inefficient investment at home and abroad, summarizes existing literature research and research results. On that basis there is the subsequent theoretical analysis and empirical study.The third part is the relevant theory of the influence of managerial ownership on inefficient investment. It summarizes the concepts of managerial ownership and inefficient investment, reviews the development process of managerial ownership in our country, explains the expressions of the inefficient investment under agency conflicts between the shareholders and managers, and analyzes the influence of managerial ownership on inefficient investment and mechanism of action.The Fourth part is the empirical study about the effect of managerial ownership on inefficient investment. This is the focus of this article. It built research framework based on the front of theoretical analysis, shows the level of China's inefficient investment and managerial ownership through analysis of actual data, and test the rationality of the hypothesis. In the empirical studies, this article select from 2007 to 2009 in Shanghai and Shenzhen a-share listed companies (except the financial sector) for the sample, set of three layers of progressive model, using descriptive statistics and regression analysis method to comprehensively analysis the relationship between managerial ownership and inefficient investment.The fifth part is research conclusions and policy recommendations. Study results show that there is prevalence of inefficient investment behavior in listed companies in China; most enterprises are performance for under-investment. In China, the effect of managerial ownership on inefficient investment is limited, but the managerial ownership can effectively reduce the cash flow sensitivity of the inefficient investment, in addition, relative to the State-owned holding enterprises, the inhibition effect of management holding on enterprise' inefficient investment is even more apparent in non-State-owned holding enterprises.These results to a certain extent affirmed the positive role of managerial ownership, so this article make recommendations from the perspective of promoting reasonable and healthy development of the system, it with a view to provide references for better implementation of the system in the future and improving incentive mechanisms.The main contributions of this article are as follows:(1) Rich the research literature about managerial ownership on the effect of inefficient investment. Research on managerial ownership mostly focused on the relationship between the managerial ownership and corporate performance, and the literatures which comprehensively analysis the relationship between managerial ownership and inefficient investment are few(2) Reveal the status of China's inefficient investment and managerial ownership. Managerial ownership in China started relatively late. In 2006, the improvement of relevant policies and regulations supported the development of managerial ownership. This article analysis of China's enterprise management ownership level and interval distribution of shareholdings and revealed the difference of management shareholding among different industries, different ownership. Enterprise's inefficient investment level is constantly changing; empirical analysis of this paper describes the level and characteristics of inefficient investment in enterprises.(3) this article compares the influence of managerial ownership on inefficient investment between different controlling natures, then point out that the inhibition effect of management holding on enterprise' inefficient investment is even more apparent in non-State-owned holding enterprisesThe main shortages of the article are as follows:(1) In the reality, the effecting factors of enterprise's inefficiency investment are multifaceted, this article mainly reference abroad research model in researching the relationship between managerial ownership and inefficient investment, but the fitted degree of the regression results does not ideal.(2)This article does not distinguish between different sources and types of management shareholding, but uses the total number of management shareholding as the variable. Different sources of managerial shareholding will cause different effect. Does not take into account different source of management shareholding is one of the shortcomings of this article.(3)This article does not consider internal shareholding structure and distribution, but seems management layer as a consistent whole, it may be a problem. Internal unfair shareholding or unequal distribution among managers may cause a part of managers to become the representatives of significant shareholders, and other managers of the company were unable to form a community of interests.