Research On The Non-efficient Investment From The Perspective Of Executive Incentive

In classical enterprises, the ownership and management right of the enterprise are the same. With the development of economy, different people do different tasks can improve the efficiency of enterprises. In the modern enterprise, the ownership and management right are gradually separated, the goal of shareholders and senior management are also became different, together with information asymmetry, the principal-agent problem arises spontaneously. In the pursuit of personal income, executives are likely to run counter to the shareholder interest maximization goal, so they have the chance to make the inefficiency investment in order to increase their private income. This will damage the value of the company. In order to solve the agency problem, this article is to discuss the solution of how to ease the inefficiency of investment from the perspective of executive incentive.Based on the companies of the Shanghai stock exchange and Shenzhen stock exchange as the research object, by 2009 to 2013 as the research range, I finally obtained 6518 observed value through the reasonable and scientific selection. I use the residual value as measurements of over-investment, under-investment and unexpected compensation value by building the capital investment model and monetary compensation incentive model. Then I make these variables into the last model. The empirical results show that the inefficiency of companies investment in our country is universal existence, And the investment insufficiency behavior of the company is more than the existence of excessive investment behavior. Monetary compensation for executives can have inhibitory effect to overinvestment and underinvestment phenomenon. And the equity incentive can play a role of long-term incentive in non-state enterprises, so as to curb overinvestment and underinvestment, but it did not play the corresponding role in state-owned enterprises. On-the-job consumption as implicit incentives of enterprise can alleviate over-investment phenomenon, but it cannot relieve to the company of underinvestment.This paper’s results indicate that the executive compensation contract had not achieve the optimal level, so the shareholders should design a more effective compensation contracts and incentive mechanism, in order to make the interests of shareholders and executives to achieve the optimal balance. Only in this way, the shareholders can alleviate the agency problem and to achieve the enterprise goal of scientific, effective and rapid development.