Non-Executive Director's Mitigating Effect On Enterprise's Non-Efficiency Investment

Survival and development of enterprises can not be separated from a series of investment activities of listed companies,which ensure the future source of cash flow.Under the condition that the market is completely effective and there is no agency problem,the enterprise can make the investment decision which maximizes the enterprise value and has the efficiency,However,China's capital market is different from the capital markets such as Britain and the United States.China's capital market has limited effectiveness,And the problem of agency problem and information asymmetry are becoming more and more prominent,which makes the inefficient investment of listed companies become a common phenomenon,In fact,inefficient investment reduces the financing efficiency and operating efficiency of listed companies,but also seriously affected the development of market economy,Therefore,the focus and focus of enterprises and scholars are the causes of inefficient investment and how to reduce the inefficient investment.Board of Directors is an important mechanism and important link in improving corporate governance.In the composition of the board of directors,the board of directors can be divided into internal directors and external directors.The external directors are composed of two parts:independent directors and non-executive directors.Since the introduction of the independent director system in the United States and the United States,independent directors have been the focus and focus of the study.However,in recent years,some scholars have pointed out that the role of independent directors is limited by many parties and can not fully play its role,In contrast,a non-executive director,who is directly recommended by a majority shareholder or other significant shareholder,may be more independent of management,and non-executive directors can mitigate inefficient investments.In addition,the capital market and the ownership structure are quite special in our country,and the research on the ownership structure of the company is also based on the traditional principal-agent theory and the theory of agency conflict between large and small shareholders,Therefore,we can analyze the effect of non-executive directors from the perspective of ownership structure and verify whether the role of non-executive directors will be affected by the ownership structure.Based on the above discussion,this paper from the theoretical analysis and empirical tests were verified and verified the conjecture,First of all,this paper reviews and summarizes domestic and foreign literature on non-efficiency investment,board members and ownership structure,Then it defines the concepts of non-efficient investment,non-executive directors and ownership structure,analyzes the inefficient investment situation of listed companies in China at present and the theoretical framework of non-executive directors and inefficient investment and non-executive directors,The paper analyzes the effect of non-executive directors on the inefficient investment and the effect of ownership structure on non-executive directors.Secondly,this paper uses the absolute value of residuals of Richardson model to measure the degree of non-efficiency investment,and constructs three multiple linear regression models,and uses 372 listed companies listed in China's A-share market in 2011-2015 Data for empirical research.The empirical results show that:(1)2011-2015,China's listed companies is the phenomenon of inefficient investment,from the data show that the degree of non-efficient investment is generally large.(2)The presence of non-executive directors has a mitigating effect on the inefficient investment of enterprises.(3)The degree of equity checks and balances strengthens the mitigation effect of non-executive directors on non-efficiency investment,that is,firms with non-executive directors can reduce the degree of non-efficiency investment;when there is no ownership restriction,Directors have less inhibitory effect on inefficient investment.(4)In the non-state-owned enterprises,this effect is obvious,that is,compared with non-state-owned enterprises,non-executive directors play a stronger role in non-state-owned enterprises,more can ease the degree of inefficient investment.