Research On The Relevance Of Managerial Entrenchment And Inefficient Investment Behavior

The enterprise investment efficiency has always been concerned by the academia. In recent years, with the development of Managerial Entrenchment theory, more attention has been paid to the relevance between the Managerial Entrenchment and investment efficiency. In China the research for Managerial Entrenchment is not long, and China has lots of difference with the western developed capital market, therefore it is not rational to simply apply the western Managerial Entrenchment result.As a result, this paper constructs a reasonable Managerial Entrenchment model which based on the Corporate Governance theory and Demographic theory. And this paper constructs a measurable function of investment efficiency which learnt from the ideology of partial adjustment model. At last, we verify the hypothesis through regression analysis. We found that there is a strong correlation between the Managerial Entrenchment and inefficient investment behavior. Finally, this paper proposes some solutions to relieve enterprise inefficient investment behavior.