Debt Governance,Managerial Characteristics And Over

With the rapid development of Chinese GDP, the Chinese capital market develops fast, and the size of listed companies is larger and larger, and all kinds of investment are more frequently. Giving that our country is a big emerging country of the world with highly developing, the evidence of over-investment is heated concentrated by researchers to do the empirical study. As manager is the men who decide the policy of corporate finance, whether the manager’s background-i.e. age, gender, professional knowledge of finance or law, education degree, tenure, the size of management team, etc., may affect the extent of over-investment? That is what this paper concentrates on.On the basis of prior research, this paper use the methods of both theoretical analysis and empirical tests to investigate whether and how the managerial background affect the extent of over-investment. Further, we test the moderate effect of bank’s loan on the relationship between managerial background and over-investment. This paper uses the data of Chinese listed companies from2008to2012, and concluded that managerial background really affects the extent of over-investment.In details, managers of male, young, non-professional background and small team are more incline to over-invest. Additionally, in companies with higher rate of bank’s loan, the relationship between managerial background and over-investment is weaker.This paper is divided into six parts, and the major research content is as follows:The first part is the introduction. Based on the institutional background of over-investment, this paper puts forward research motivation and significance. Then, it proposes content, ideas and methods of this paper.The second part is the literature review. Firstly, we review the concept of managers, and the effect of managerial background on the corporate decision. Then, we review the related research on the determinants of over-investment. Lastly, we review the literatures about the external managerial effect of bank’s loan.The third part is the theoretical analysis and hypothesis development. In this section, we analyze how the managerial background affects manager’s decision, and additionally affects the extent of over-investment. What’s more, we put forward the hypothesis that bank’s loan can mitigate this effect.The fourth part is the research design. This part introduces the sample selection, the model design and the variable definition.The fifth part is the empirical test and result. This part includes descriptive statistics, correlation analyze, multivariate regressions and robust checks.The last part is the conclusion and policy suggestion. Also, this part put forward the limitations of this paper and the research directions in future.This paper may contribute to the former researches in three points. Firstly, we investigate the problem of over-investment through the view of strategy management, and broad prior researches on determinants of over-investment. Secondly, we examine the moderate effect of bank’s loan, and prove that bank’s loan is an important method to constrain over-investment. Finally, our conclusion offers a suggestion to companies about how to constitute on managerial team, and pick the right managers. They should take age, gender, professional background and size of the team into consideration.