Relationship Between Manager Power And Investment Based On Perspective Of Information Disclosure

As the rapid economic development, investment has become an important factor that can affect the development of both micro-economic and micro-enterprise. China’s economic still has the characteristics of emerging and transition, and it is experiencing a high-growth economy at the cost of high investment, overall the economy shows some symptoms of overheating. Recently many Chinese companies expand the scale of investment blindly and lots of money are invested into many fields. Managers’ power has a certain impact on this phenomenon.In modern society, there are principal-agent problems between owner and manager due to the separation of ownership and management. When the managers have resources and the power of making a decision, he would tend to make a decision of overinvestment or underinvestment from his own consideration. Investment is an important means of expansion, which means more controllable resources,more stable jobs and higher payment to the manager. Most of the time whether to invest needs the judgment of manager, whether to invest, the scale and ways of investment are all determined by managers,which supplies opportunities for manager to grab their own interests.As a kind of external governance mechanism, information disclosure can reduce the asymmetry of information between the owners and managers. A high level of information disclosure can bring information of efforts and performance of manages to investors, so managerial power will be bounded under the pressure of information disclosure, which will reduce the investment scale decided by managers. Bsaed on these backgrounds, this paper try to explore the influence managerial cause to corporate investment and the impact quality of disclosure cause to that influence.This paper select1559companies listed in Shenzhen between2009and2012as sample data, try to analyze managerial power from different dimensions and finally construct two indexes to measure it. This paper uses the Shenzhen Stock Exchange’s information disclosure evaluation as the measurement of information disclosure quality indicators. After the process principal component analysis, standar dization, assimilation on data, this paper aims at finding the relationship between managerial power and investment and verifies the influences caused by quality of disclosure. Rrsult of this study indicates that the more power manager have, the bigger scale of investment the corporate would take, and the behavior of listed company disclosing high quality informantions can inhibit the investment expansion influenced by manager.This paper is organized as follows:The first part is an introduction. First intruduces the research background and significance of the topic, and then collate and summarize related literature.The second part lists some related theories and proposes the hypothesizes.In this part,this paper try to build a theory core based on principal-agent theory, asymmetric information theory, contract theory and managerial power theory and analyze the relationship between managerial power, quality of disclosure and investment, then put forward two hypothesizes based on that relationship.The third part is the study design. This section includes selected data sources, managerial power design and control variables index design. And then establish the regression model.The fourth part is empirical study. After descriptive study, correlation analysis and regression analysis on sample data, verify the relationship between managerial power,quality of disclosure and investment.The fifth part are the conclusions and recommendations. This part summarize and analyze the empirical study, and put forward specific advices and at last point out deficiencies of the article.The innovation of this paper is mainly like follows:Firstly, unlike existing literature, this paper try to link the managerial power and corporate investment, this may enrich the study about managerial power. Secondly,after a systematic study on historical literature. This paper try to measure managerial power from seven different dimensions and then reconstruct a aggregative indicator by principal component analysis to make the result of study more robust. Lastly this paper try to clarify the relationship between managerial power, investment and quality of disclosure, this may enrich study of corporate governance.