Property Rights, Executive Incentive And Investment Efficiency

Investment decision-making is the core of enterprise financial management, it directly affects and decides the survival and development of enterprises. In recent years, total fixed asset investment increased year by year in China, and the investment efficiency has decreased year by year, the inefficient investment problem is becoming more and more serious, which not only damages the value of the company also hinders the long-term development of the enterprise. Based on the existence of information asymmetry between shareholders and managers management, managers at information superiority will be easy to access the relevant investment information than shareholders at information inferior, and lead managers to damage the interests of shareholders to maximize their own interests. Because of the principal-agent problem, there are conflicts of interest between enterprise owners and management, some starting motivation of the investment decision-making from executives is not to increase the market value of the enterprise or to maximize of shareholders’ interests, but from their own benefits, to obtain the invisible income and welfare through the inefficiency investment, increase their own resources and wealth, therefore, there is no close correlation between execution the investment decision and the growth opportunities of corporate. Effective incentive mechanism not only can mitigate agency-problems caused by the separation of ownership and management rights, but also motivate executives to pursue the maximum of profit. In this paper, researching the incentive effect on the efficiency of investment, we put the nature of property right in the ranks of empirical research?. According to the difference of actual controllers, China’s listed Corporation is divided into state-owned companies and private enterprises,state-controlled enterprises is further divided into the central government owned enterprises and municipal government owned enterprises, in the different nature of the property rights, enterprises of inefficient investment have some kind of serious degree, so, the focus of this paper is how to design a good incentive contract ease principal-agent problem and restrain enterprise inefficient investment behavior in the different nature of property right of the listing Corporation?This paper systematically reviews the domestic and foreign related literature, including monetary incentive, equity incentive, stock option incentive and investment efficiency, the current situation of China’s Shanghai and Shenzhen A shares of listing Corporation executives incentive contract and investment efficiency makes a brief analysis. Combined with the theory of asymmetric information and principal-agent theory,proposes research hypothesis. The empirical research of this paper is mainly to solve the following problems :(1) the effect of executives incentive on the efficiency of China’s listed corporation’s investment;(2) the impact on property right nature and executives incentive on the efficiency of investment;(3) In the different nature, the influence of the executive incentive on the investment efficiency.This paper uses the sample data of 2008-2013 years in Shanghai and Shenzhen A shares of the listed Corporation, the empirical results show that: There are inefficiency investment phenonmena among Chinese listed corporation, China’s listing Corporation has the inefficiency investment phenomena, and excessive investment company more than the lack of investment company. Senior monetary incentive, equity incentive and stock option incentive can inhibit the non efficiency investment of listing corporation. Monetary incentive was negatively correlated with over-investment and under-investment, this shows that monetary incentive can restrain over investment and ease the shortage of investment company; executive equity incentive was negatively correlated with over- investment, so was under-investment, but it is not significant; option incentive was negatively correlate associated with excessive investment and insufficient investment, but not significant. Based on the nature of property right, state-owned holding enterprises can inhibit enterprise non efficiency of investment more than private holding enterprise, the central holding enterprises can inhibit enterprise non efficiency of investment more than the local government holding company; the state-owned enterprises is negatively correlated with and under-investment and over-investment; the central holding company has a significant negative correlation with over-investment, also has a negative correlation with under-investment, but not significant. Monetary incentives to executives can inhibit the inefficient investment more obviously in state-owned company than in private company. the central holding companies and private holding enterprise of equity incentive effect is more significant; the central holding company can inhibit the non efficiency investment than other property rights of enterprises.Finally, based on the above empirical findings, combines combined with the system background in our country now, put forward this paper proposes some policies, namely, to establish a rational incentive mechanism, strengthen information disclosure of listing corporation, optimizing equity structure.