Internal Control Quality,jealousy Of Management And Over-Investment

In recent years,there is high degree of dependence on investment of the superficially rapid increment of GDP in China.Investment is an important method of enterprise resource allocation,and its efficiency is critical to long-term development and value of enterprises.Research shows that over-investment is ubiquitous in Chinese enterprises,which not only wastes financial resources,but also leads to financial crisis in case of investment failure.The topic of reasons causing over-investment mainly focuses on principal-agent theory,environment management as well as government by scholars,while the study of management inefficient behavior based on financial behavior just rises.Considering the jealousy of management as an important factor of inefficient behavior,the article aims to elaborate this behavior.Jealousy rises when management has the sense of unfair treatment,to cover the loss causing by compensation gap,they prefer either increasing investment to augment controlled resource or slacking to have more leisure time.Besides,agency conflict and information asymmetry gives rise to the behavior of chasing profit and opportunism as well as inefficient investment.With publishing and implementing of ‘criterion of internal control' and corresponding guidelines on which there is increasing attention,internal control is considered gradually as an important method of company management,characterized by control of company environment,internal supervision,external reports and so forth along with profound influence to restrain adverse selection and then optimize development of enterprise.The article begins with the external compensation gap of management that is one of the factors leading to management jealousy featured greatest importance,most perceptual intuition and widest range of application.First,it analyzes the influence of jealousy to investment decision.Second,it verifies the moderating effect of internal control quality.At last,it studies the inhibitory action of internal control quality for relationship between jealousy and over-investment.Given that the difference of compensation system,work environment and internal control basis between state-owned enterprise and non-state-owned enterprise,the article considers the influence of internal control quality and management jealousy,respectively by different property right characters,on over-investment.Additionally,it is analyzed that how does internal control work on management mentally and then have an impact on investment efficiency.Based on the above analysis,the data from 2013 to 2015 is chosen as the sample.Conclusions is drawn by a corresponding model is built based on method of Richardson(2006)of measuring investment efficiency:(1)because of jealousy of management caused by its monetary compensation gap,management in state-owned enterprises prefers passive investment,while that of non-state-owned enterprises manifests investment increment to argument the owned resource to cover the loss,which results in even more serious over-investment.(2)Internal control of high quality can enhance the usefulness of business information,moderate phenomenon of information asymmetry,low over-investment and thereupon lead to rational investment.(3)Internal control featuring restrictive function of management can restrain both opportunism behavior and inefficient investment.It works respectively on both state-owned enterprises and non-owned ones as well.According to study,the article makes a conclusion that it will be a right way to get reasonable investment planning,adhere to strategic development direction,and have less blind investment.Meanwhile,it is necessary to perfect compensation and decision-making mechanism as well as enhance internal control institutionally,which better supervisor and stimulate management behavior,decrease the probability of behaviorism so that there is less waste of resources and investment chances and even the value realization of enterprise guaranteed.In summary,the article enriches relative theory of irrational behavior of management,define tentatively the method to measure jealousy of management,and expand the research of enterprise inefficient investment and internal control.Consequently,what is mentioned above can be used for new reference for enterprise to discovery problem,improve management,and ease the problem of agency.