Empirical Research Of Executive Incentive Effect On Over Investment In Listing Corporations

In recent years, along with our country economic situation for a good. investment showing a growing trend, and has become a major force driving the economy. Because the contribution of investment to economic has been high, resulting in China’s economic structure to a certain extent, there is imbalance, which attracted the attention of the academic circles. The economy of our country is still in the transition process at the present stage, and continue to improve, but inevitable there will be a lot of problems in the development process. For the investment, because of the appearance of agency relationship, China listing Corporations often show the investment impulse that does not conform to the actual situation of company, blind expansion of company size, redundant construction, In order to short-term interests, managers ignoring the long-term development of the company and so on are likely to cause excessive investment phenomenon. In addition, some of China’s state-owned enterprises through restructuring to become a listed company, these companies are often manufactured to operate under the guidance of the government’s policy. Therefore, in order to complete the policy objectives, over-investment is likely to be more serious.In order to study the over investment situation of China’s listing Corporations. First of all, introducing China’s current situation of investment, examining the contribution of investment to GDP, sorting of relevant literature about over-investment, defining the core concepts of executives, executive incentives, investment and investment, and then analyzing the investment related theory. Making the assumption about the relationship between the variables and excessive investment under the guidance of the theory; Secondly, using the A shares data of2009to2013in the Shanghai Stock Exchange and Shenzhen Stock Exchange in addition to those who do not meet the conditions. Through an analysis of optimal investment level model of listing corporation. We can get a variable that the Overinvestment. on the basis of empirical optimal executive monetary compensation model analysis, we get one of the alternative variables of executive incentive is unexpected monetary compensation variables. Finally, analyzing the relationship between executive incentive(including executives monetary incentive, executives unexpected monetary incentive and executive equity incentive) and the Overinvestment. At the same time, introducing the variable nature of the largest shareholder, a cross variable between nature of the largest shareholder and executive incentive. Then analyzing the effect of different controlling shareholders on the nature of excessive investment. Therefore, In this paper, whether of high-speed growth of investment more than the optimal level of investment in listing corporation? Whether there is the phenomenon of over-investment in China’s listing companies? What are the factors that affect the listing corporation’s investment level? Are executives excessive investment incentives have been suppressed to some extent? Whether the controlling shareholder of nationalization weaken the inhibition role of the executive incentive for Overinvestment. These are the content of this paper to study.After a series of theoretical analysis, empirical analysis and robustness tests, we obtain the following results:The first, from the over investment situation, the over investment situation at the listed companies in coastal areas is more serious. The over investment situation at manufacturing industry and the real estate industry is more serious. Second, from the effects of variables on the excessive investment, executive incentive has significant inhibitory effects on over investment, the State owned holding will weaken the incentive inhibitory effect on over investment. The study results provide a reliable answer for whether the level of investment is optimal in China’s listed companies, and to further improve the company incentives, to ease the phenomenon of the Overinvestment, even to provide some references for successful economic transformation.