A Study On The Effect Of Corporate Investment Efficiency Of Idiosyncratic Risk And Manager's Risk Characteristics

As one of the most important financial decision,the enterprise investment decision-making not only determines the capability of create profits,realize the value added action and achieve corporate sustainable development strategy;but also has the great significance of improving the capital market effectiveness and promoting the growth of the national economy. From the research literatures about investment efficiency we can conclude that corporate governance structure, the pri ncipal-agent theory & asymmetric information theory and the quality of financial reporting has become the focus of the current study. The global financial crisis had brought enormous business risks and uncertainties for Chinese enterprise, however,under the implementation of the national economic stimulus plan, the influence research about the enterprise idiosyncratic risk on the investment efficiency will have significant practical and theoretical value. Meantime, based on the development of behavioral finance theory, we incorporated the manager's irrational behavior into business investment decision-making to study the influential mechanism of m anager's personal risk characteristics on enterprise investment.Combining the latest theoretical research ac hievements, based on the investment efficiency theory, risk preference theory and the idiosyncratic risk theory, this paper analyzes the influence mechanism of the enterprise idiosyncratic risk and the manager's risk characteristics on the enterprise investment efficiency. Finally, we use the panel data from 2007 to 2013 to examine our theoretical h ypothesis.Empirical results show that idiosyncratic risk will significantly affect the company's investment efficiency, specifically, the higher of the level of idiosyncratic risk, the lower of the over-investment, the idiosyncratic risk act as a "suppress governance" role for over-invest and "deterioration" effect for under-invest; However, individual managers differences in risk appetite will direct and indirect significantly affect the company's investment efficiency, Namely, risk-preference manager tend to use low discount rate to overestimate investment income and underestimate the risk,which led to over-investment problem,but it also can ease the under –investment phenomenon to a certain extent.