Research On The Effect Of Managerial Discretion To Over-Investment In Listed Companies

Investment is the important content of enterprise financialmanagement activities. In recent years, efficient investment promoted therapid development of Chinese economy, but the listed companies appearedthe phenomenon of overheat of investment. Many listed companiesblindly expanded the scale of enterprises, invested in less desirableprojects, even unrelated to the main business in the area, and affected theoverall profitability. Enterprise investment income whether successfulimplementation is not only related to the interests of investors, but also thenational macro economic development. Therefore, research the causes andcontrol measures of over-investment in listed companies, so as to realizethe maximization of enterprise value, become a problem to be resolved.Managerial discretion is the latitude of power and action which managers have in making decisions and taking actions, the degree ofmanagerial discretion on the investment decision of enterprises have acertain impact. This paper in view of listed companies over-investmentphenomenon, used manufacturing listed companies from Shanghai as theresearch samples, from the perspective of managerial discretion, analysisthe causes and restrict factors of over-investment in listed companies.Through empirical research the relationship of managerial discretion andover-investment, the manager of autonomy arrangement for furtheroptimization, and then put forward to the restrict and countermeasures ofover-investment in listed companies.Through empirical research, this paper draws the followingconclusions: manufacturing listed companies put in over-investmentphenomenon, managerial discretion and over-investment are positivelyrelated, general manager and chairman of both concurrently and too muchfree cash flow will promote over-investment; independent directors andmanagers holding on the inhibitory effect of over-investment limited; and compared with non state holding listed companies, managerial discretionwas bigger, and more prone to over-investment in state-owned accuselisted companies.