Research On The Influence Of The Non-Executive Director And Bank Loan On Enterprise Overinvestment

“We must insistingly encourage,support and guide the development of the non-public sector,so that the market plays a decisive role in the allocation of resources.” Proposed by Xi Jinping at the 19 th CPC Central Committee,the report indicates that the non-public economy has been a big part of china's economy.At the same time,compared with state-owned enterprises,private enterprises have more flexible development and more reasonable structure,so it makes more sense to study private enterprises independently.As an important financial activity,investment plays an important role in the survival and development of enterprises.Due to the existence of principal-agent problem,the self-interested behavior of managers deviates from the ultimate goal of maximization of shareholders' interests.From inside of the enterprise,the non-executive directors appointed by the majority shareholders and other influential shareholders can supervise the management,and thus effectively alleviate the problem of overinvestment.From outside of the enterprise,the main channel for external financing of Chinese enterprises is the bank loan,and the development and expansion of enterprises need the support of bank funds.So bank loans are also inhibiting excessive investment in enterprises.Moreover,this paper divides bank loans into Credit loan and Collateral loan,and investigates the inhibitory effect of different bank loan conditions on excessive investment.This paper selects the private listed companies listed in Shanghai and Shenzhen stock market as the research objects in 2012--2016,and examines the inhibiting effect of non-executive directors and bank loans on enterprise's excessive investment.The research perspective of this paper may be a useful supplement to the research of enterprise overinvestment.Through the research,the following conclusions are drawn: First,non-executive directors can effectively curb the excessive investment behavior of private listed companies.Second,the ratio of the bank loan to the total assets is inversely proportional to the overinvestment of the corporation,which means that the camera mechanism of the loan is working,and effectively supervising the investment behavior of the enterprise.Third,the credit and Collateral loans in total bank loans can effectively hold back alleviate the excessive investment behavior of enterprises.According to the empirical results,this paper puts forward relevant policy Suggestions on how to effectively restrain management from using corporate capital to make excessive investment.First,optimize the structure of board members,increase the proportion of non-executive directors in the board of directors,strengthen the construction of non-executive directors,and exert the supervision effect of non-executive directors.Second,focus on the professional cultivation of non-executive directors,select personnel with high technical skills to serve as non-executive directors,and improve the informationdisclosure of non-executive directors.Third,the bank should improve the credit approval process,the project of enterprise loan should be carefully reviewed in accordance with relevant regulations,timely update the credit rating of the enterprise,and play the supervisory role of credit loan.Fourth,The bank shall strengthen the auditing procedure of mortgage loan,check the ownership of the assets of the mortgaged property,use condition,book value or fair value,and assist the bank to reduce the credit risk better.Fifth,improve the norms of internal control of enterprises,strengthen the training of personal professional ethics of management,and make them consciously maintain the security of the enterprise's funds.