Research On Equity Incentive And Inefficient Investment

Investment,exports and consumption are “three carriages” that drive economic growth.Of the “three carriages” the investment plays a pivotal role at this stage of China's economic development.In China where the economic development is investment-driven mainly,the investment efficiency of a little distortion will lead to huge waste of resources throughout the economy.Just as the saying goes: the difference between the cents lost a thousand miles.Therefore,it is of great theoretical and practical significance to study the investment efficiency and its influencing factors.Most of the domestic and foreign scholars study the enterprise's inefficient investment research basing on the information asymmetry theory and principal-agent theory.In the framework of information asymmetry theory and principal-agent theory,a large number of literatures have found that stock option incentive has synergistic effect of interest.Through the implementation of equity incentive,executives can make investment decisions more likely to maximize shareholders' interests.However,there are a large number of literature indicating that the implementation of equity incentives cannot solve the agency problem,but may become a tool for executives to convey their own interests,because executives may use power to exert a significant impact on pay and incentives.Based on the legal environment and the level of corporate governance in China,whether the equity incentive plays a synergistic effect to improve the efficiency of investment in China's listed companies,or whether the management reduces the investment efficiency of the listed companies through equity incentives for their own welfare? Equity incentives on the investment efficiency of listed companies in the statecontrolled listed companies and private listed companies are the same? What is the role that Macro-monetary policy and the equity incentive of listed companies play? Does equity incentives play the same role for varying degrees of overinvestment?Based on the data of listed companies from 2006 to 2014,this paper makes a theoretical analysis and empirical test on the above problems,and draws the following conclusions:(1)the listed companies that implement equity incentive reduce the investment efficiency;(2)Although the listed companies in the state-controlled listed companies have not played a significant role in stimulating the state-controlled listed companies,the private listed companies play a significant negative role;(3)Loose monetary policy provides an environment where the companies who implement equity incentive choose over-investment behavior,playing a role in promoting overinvestment.(4)Although the equity incentive has reduced the investment efficiency of the listed companies to a certain extent,it has an inhibitory effect on the serious overinvestment behavior.The innovations of this paper are as follows:(1)In this paper,we use the method of quantile regression to study the influence of stock option incentive on different degree of over-investment behavior,and broaden the method of over-investment,supplement the existing literature.(2)Combining the macro and micro factors,the factors influencing the investment efficiency are comprehensively studied,and the existing literatures are enriched.(3)In this paper,the propensity score matching model is adopted to test the robustness,which makes the conclusion more persuasive.