An Empirical Study Of The Impact Of Equity Incentives On Companies' Non-efficiency Investments

From the perspective of corporate governance,the investment decision is the pivotal role.But due to the separation of ownership and management rights,the existence of agency conflicts,Managers often do not consider the rights and interests of the shareholders,but in their own interests as the starting point,such decisions are often made of inefficient investment decisions.In order to avoid the manager to make the non efficiency investment decision,monetary remuneration seems to have been unable to meet such needs,the risk of executive stock ownership and equity incentives in these years,senior executive's role has been enriched,they are not only the business of the enterprise,but also the owner of the enterprise.so as to urge them to master the awareness of the company's decision.The implementation of equity incentive in China started relatively late,but since 2005,the listing <Corporation equity incentive management approach(Trial)>promulgated,equity incentive has been a very fast development,Wind database data show since 2014,a total of 151 listing Corporation implemented equity incentive plan,there are 51 companies in the equity incentive plan for the option and 92 companies restricted options,involving funds totaling 15 billion 400 million yuan.However,it is worth pondering that,even if we implemented the equity incentive,is the manager's investment decision really optimized,Non efficiency investment has been effectively suppressed,this paper will study it.In this paper,the author has read a lot of domestic and foreign literature related to equity incentive,the literature is reviewed and sorted out,learned the basic theory of principal-agent theory,human capital theory and so on,understand the various theories of the point of view.Then,the development of equity incentive in China is briefly introduced,and from some aspects of the implementation of equity incentive in China's current situation is analyzed,the chart shows the distribution of its composition.According to the distribution situation,in China current implementation of equity incentive of enterprises,mainly concentrated in the manufacturing industry,so this paper selects the sample in 150 manufacturing companies listed on the stock,collected three years of data as the research object.In the model selection phase,the author compares each model,at last determine to use Richardson(2006)appropriate investment model,the residual error is used as a measure of the efficiency of investment,then I establishes the model of the model of the relationship between non efficiency investment and equity incentive,put the relevant variables and data into the model.The results of empirical studies show that,equity incentive can effectively restrain inefficient investment behavior,reasonable use of financial borrowing can also restrain the inefficient invest behavior,however the higher the proportion of the first major shareholders,the more serious behavior of non efficiency investment.Therefore,this paper puts forward reasonable suggestions for the company,hope thatthese implementation of equity incentive listing corporation have reference.Because of my energy and ability,this paper has a lot of problems,in the future the research will be improved.