Research On Influence Of Managers’ Background Characteristics To Corporate Over-investment

In the development of an enterprise, resource distribution plays a fundamentalrole. From the perspective of an overall analysis, the over-investment andresource-wasting caused by such factors as unreasonable capital structure, separationof management right from ownership, over-confidence of management staff andstrategic mistake can all be attributed to humans factors. Such human factors asdecisions and behaviors exert a most important function in enterprise development.Human decisions and behaviors, especially those of senior management staff, dependon different background characteristics. Therefore, this paper explores the correlationbetween background characteristics of management staff in Chinese listed enterprisesand the over-investment of enterprises by taking the upper echelons theory as thebasic idea, reviewing the theories and references related to background characteristicsof management staff and enterprise investment, collecting data for empirical study,and carries out a check analysis of the two kinds of listed companies in China: stateholding enterprise and non-state holding enterprise through regression model bycombining the special state status and cultural system in our country so as to make afurther explanation about the effect of management staff’s background characteristicson enterprise over-investment.This paper adopts all A-shares companies listed in stock markets of Shanghai andShenzhen from2009to2011as research samples, measures the backgroundcharacteristics of the manager team from following five aspects: average age,education level, tenure, scale and sex, establishes multiple linear regression model,assesses the enterprise investment efficiency through expected investment model, andchooses enterprise with over-investment to carry out further study. The study indicatesthat there is a negative correlation between the average age as well as education leveland the over-investment of enterprise, a U-shape correlation between the managementteam and over-investment of enterprise, and a positive correlation between the maleproportion in management team and over-investment of enterprise. The study ofsamples which have been divided into two groups according to the properties ofcontrolling shareholders shows that the results of two groups vary from each other. Itturns that the background characteristics of management staff in state holdingenterprises can explain better the over-investment of enterprise. In the samples of stateholding enterprises, the average age, education level and management scale havesame effect as those in the full sample; while in the samples of non-state holding enterprises, only education level and male proportion of the management staff havesame effect as those in the full sample. The comparative analysis can provide a moreconvincing basis for the listed companies in our country to select senior managementstaff so as to effectively control the over-investment of enterprise, improve theinvestment efficiency and realize the optimal allocation of enterprise resources.In accordance with above-mentioned empirical results, this paper puts forwardfollowing suggestions for constructing a excellent senior management team: list thebackground characteristics of management staff into the review items,optimize theallocation of management resources,keep reasonable age level and team scale of themanagement staff, improve the education level of management staff, optimize themode of managers’ appointment,and keep the balance of internal and externalmanagers so as to provide a better service to the human resources management inlisted enterprises.