The Influence Of Executive Compensation Stickiness On Over-investment Of Enterprises

The agency issues arising from the separation of two rights of modern enterprise management has brought great influence to the enterprise financial decision,in terms of enterprise investment behavior,the principal-agent problem will lead to over-investment,the inefficient investment behavior will undoubtedly cause serious losses to the enterprise value.In view of the excessive investment behavior of enterprises,the academic circles have launched the research from the level of salary incentive,many enterprises have also developed the executive compensation system to solve the agency problem.But in recent years,the phenomenon of executive compensation stickiness has become serious in our country,the salary system not only did not play a good control effect,but create opportunities for executives to gain private benefits,breeding the new agency problem.Therefore,it is of practical significance to study the relationship between the executive compensation stickiness and the over-investment.At present,China's market economy is in the transforming period,the economic system is not perfect.The government,as the dominant capital market,still controls the important resources.Under the special system background,the relationship between the executive and the government has a profound influence on the enterprise behavior.On the basis of summarizing the existing domestic and foreign research results,this article using the method of normative analysis and empirical analysis to study the influence of executive compensation stickiness on over-investment,and then study the influence of political connections on the relationship between executive stickiness and over-investment,after learning the principal-agent theory,the optimal contract theory,managerial power theory,rent-seeking theory and other new theories.The main conclusions of this study are as follows:(1)there is a positive correlation between executive compensation and over-investment behavior.(2)when the cash flow is abundant,the positive effect of executive compensation stickiness on over-investment is more significant.(3)political connections have a significant positive moderating effect on executive compensation and over-investment behavior.Aiming at the problems found in the study,the paper made the following suggestions: establish a reasonable salary system to reduce the maneuverability of salary and weaken the executive compensation stickiness;establish the supervision mechanism of enterprises to improve the transparency of executive compensation and standardize the investment motivation of enterprise executives;consume the professional manager market and improve the cost of non-compliance executives;promote the process of market transaction of social resources to avoid rentseeking of government power.