Equity Incentive,Environmental Uncertainty And Insufficient Investment

Investment decision is one of the important financial management activities of enterprises,and reasonable investment decision can promote the long-term development of enterprises.However,nowadays,the environment of enterprises is in constant change,and the environmental uncertainty will increase the lack of investment,hinder the long-term development of enterprises.So we need to think about how to solve the problem of the insufficient investment under the environmental uncertainty.Equity incentive was originated in the western developed countries.In the modern enterprise,giving managers parts of the company equity can unify the interests and target of managers and shareholders,thus easing the principal-agent problem.Equity incentive in the Western developed countries has play an important role,but in our country,it appeared relatively late.Therefore,whether the implementation of China's equity incentive can effectively reduce insufficient investment behavior,especially the lack of investment caused by environmental uncertainty,we need to think about it.This paper mainly studies the effective inhibition of the equity incentive on insufficient investment,especially the lack of investment caused by environmental uncertainty,and compares the effect of equity incentive between state-owned enterprises and non-state-owned enterprises.The main structure of this paper is as follows:Firstly,the related research on environmental uncertainty,equity incentive and underinvestment is reviewed.Then,three related concepts of underinvestment,environmental uncertainty and equity incentive are defined,and related theories of principal-agent theory,private cost private income theory and incentive theory are explained.Next,the relationship among environmental uncertainty,equity incentive and underinvestment is analyzed theoretically,on this basis,this paper propose six hypothesis.Finally,based on the data of China's A-share listed companies from 2011 to 2015,this paper makes an empirical test and draws the conclusion of this paper.The results of this paper are as follows:environmental uncertainty will increase the lack of investment of enterprises,and compared with state-owned enterprises,the increasing is stronger on the non-state-owned enterprises;the equity incentive can effectively curb the lack of investment,and also the equity incentive is more restrictive to the lack of investment in the non-state-owned enterprises.The equity incentive can inhibit the lack of investment caused by the environmental uncertainty,and also the inhibition is much better in the non-state-owned enterprises.In this paper,the innovation is reflected as follows:Firstly,from the perspective of environmental uncertainty,analysis the relationship between equity incentive and underinvestment,which not only clear the equity incentive mechanism,but also help to find a solution of underinvestment.Secondly,distinguishing the nature of property rights,this paper compares the relationship among equity incentive,environmental uncertainty and the lack of investment with different property properties,and provides the empirical basis for the companies with different property properties.