The Influence Of Environmental Uncertainty On Insufficient Investment In The View Of Equity Incentive

As one of the most important core activities for enterprises,efficient investment can lead to growth of national economy.However,China is now in a special period of economic transition.What's worse,the present international situation remains tense and turbulent.Consequently,the capital market is in a changeable situation,and insufficient investment is being aggravated by the increasingly environmental uncertainty.So,the way to ease insufficient investment in the situation of environmental uncertainty is drawing more and more attention these years.In recent years,the autonomy of implementing equity incentive is greatly enhanced in Chinese listed companies.At the same time,the effect of implementing equity incentive is also being warmly discussed.At present,the domestic and foreign literatures have illustrated that equity incentive can coordinate interest conflicts between shareholders and managers,and then can inhibit inefficient investment.However,there are very few literatures about whether equity incentive can still inhibit insufficient investment under environmental uncertainty or not.So,this paper adds an important factor of environmental uncertainty,discussing about the relationship between equity incentive and insufficient investment under environmental uncertainty through theoretical analysis and empirical research.What's more,it is necessary to consider property nature in the process of researching under the background of our country.So,in order to provide empirical evidence of improving equity incentive system for different companies,this paper compares the relationship between equity incentive and insufficient investment under environmental uncertainty in companies of different property nature.This paper is divided into the following five parts:The first part is introduction.Firstly,this part of the paper mainly introduces the background of the selected topic and the research meaning.Secondly,it sorts and summarizes the domestic and foreign relevant literatures about environmental uncertainty,insufficient investment,the relationship between environmental uncertainty and insufficient investment,the relationship between equity incentive and insufficient investment.Finally,it expounds research methods,research framework and research purposes,and at the same time illustrates the innovation of the research.The second part is the related theory and the research hypothesis.First and foremost,it defines three concepts,consisting of environmental uncertainty,equity incentive and insufficient investment,and then studies the theoretical basis and combined with the theoretical basis to analysis,including information asymmetry theory,principal-agent theory,uncertainty theory,private cost and private benefit theory and incentive theory,finally on the basis of relevant theory to explore the mechanism and put forward the assumption of this paper.The third part is the empirical research design.This part determines the research sample,gives the selection of variables and concludes the design model according to the relevant domestic and foreign research design.The fourth part is the empirical test and the result analysis.Basing on the sample,this paper carries out descriptive statistics,correlation analysis,regression analysis and the robustness test.The fifth part is the conclusions and suggestions according to the results of the inspection.This part summarizes empirical research results,gives some suggestions,points out the shortage of this article and indicates the development direction of the future research.According to the empirical research results,environmental uncertainty and insufficient investment had significant positive correlation,showing that environmental uncertainty increases the private cost of managers and the difficulty of shareholders to supervise managers' behavior.As a result,insufficient investment is being aggravated by environmental uncertainty.Fortunately,this negative effect will be mitigated if executives are compensated with option.The results support the view that equity incentive can coordinate interest conflicts between shareholders and managers and compensate the private cost of managers,helping to inhibit insufficient investment under environmental uncertainty.What's more,there are more severe principal-agent problems in state-owned companies,such as proprietor absence and insider control,and all of these have a negative affect on the effect of implementing equity incentive in state-owned companies.As a result,the equity incentive in non-state-owned companies can inhibit insufficient investment under environmental uncertainty more significantly than in state-owned companies.Innovation point of this article is that it combines with environmental uncertainty when studying on the relationship between equity incentive and insufficient investment,which enriches the study of equity incentive and environmental uncertainty's economic consequence.In addition,considering the particular problem of property right in China,it compares the relationship between equity incentive and insufficient investment under environmental uncertainty in companies of different property nature,which can provide empirical evidence for companies of different property nature.