Empirical Study On The Influence Of Decision-making Power Configuration And Investment Efficiency

Decision-making power is one of the focus of corporate governance research. Decision-making power is owned by the leaders of all the special powers in the enterprise, while the most important leaders in the enterprise is nothing less than the chairman and general manager. Therefore, studying the configuration of decision-making power is conversion to the power configuration between chairman and general manager. All of these, the most important manifestation between the general manager and the chairman is whether this two jobs in one,that is called “CEO duality”.CEO duality proves that the enterprise is centralized decision-making and it is highly centralized enterprises,otherwise it explains between the chairman and general manager there is a clear division of labor. In the more decentralized decision-making authority enterprise, they check and supervise each other. On the other hand, the investment is an main drivers for the company’s growth and the important foundation of future cash flow growth. As a micro-foundation of the overall macroeconomic, enterprises’ inefficient investment behavior will inevitably endanger the survival and development of the company,even the entire country’s economic growth.Based on the decision power configuration and investment efficiency playing a important impact for business development, we are starting from the actual situation of China’s listed companies, selecting the enterprise life cycle, the quality of accounting information, ownership concentration and executive equity incentive four perspectives, to study the effects on the investment efficiency produced by the decision-making power configuration under specific circumstances. Papers selected 975 sample companies in Shanghai and Shenzhen total 4875 group data between years 2009-2013,and we used Richardson(2006) model and the DD model respectively measure the efficiency and quality of accounting information on investment. By building a hierarchical regression and analysis of variance model, we analyzed the specific impact of the investment efficiency produced by the decision-making power configuration under the four perspectives.The conclusions of this paper are as follows: First, under the same other conditions, the two job Chairman and general manager in one will improve the investment efficiency in growth companies, while two grade-one is more likely to cause non-efficiency investments in the enterprise in a recession, and in mature enterprise grade are separate or one is little impact on the investment efficiency; second, with a good quality of accounting information, the two-in-one post would be beneficial to enhance the investment efficiency, in poor quality of the corporate accounting information two grade-one is more likely to result in inefficient investment; third, in lower ownership concentration of the company, CEO duality helps to enhance the investment efficiency, on the other hand, the company with the higher concentration of ownership, one of two grades are more likely to resulting in inefficient investment; fourth, in the companies with the implementation of the executive incentive, two grade-one helps to enhance the investment efficiency, and the companies without the implementation of executive incentive, two grade-one is more likely to result in inefficient investment. The results show that, under different circumstances, differences in decision-making configuration will produce a completely different impact in investment efficiency. We suggested that companies should adjust the configuration of deciding power between the general manager and chairman in time in accordance with the specific circumstances in each enterprise, in order to improve the investment efficiency to a certain extent, so that it could accomplish business objectives better.