Research On Equity Incentive And Inefficient Investment Of SME Board Listed Companies

There are three basic activities of a company's financial management-investment activities,financing activities and operating activities and among which the investment activities are the important ones and have a significant connection with the other two kinds of activities.The investment decisions of an enterprise's affect the future development of the enterprise to a great extent.Therefore,any company that has a problem of inefficient investment would not only have a bad impact on the development of enterprises but also harm the benefits of stakeholders'.The existence of the inefficient investment in the company is due to the asymmetric information between the management and the shareholders as well as the principal-agent problem.The equity incentive is considered as a great method to solve this problem.Therefore,it is of great practical significance and feasibility to study whether equity incentive of listed companies can alleviate the inefficient investment or not.The main object of this thesis is the SME board listed companies.First,choose datas from 2006 to 2016,which were based on companies in SME board.Second,use the richardson model to measure the level of inefficient investment,and divide the inefficient investment into excessive investment and lack of investment.Then,use the model to test whether listed companies have inefficient investment.Last,study the relationship between equity incentive and inefficient investment to find out that whether different incentive modes have different effects in alleviating inefficient investment.The researches show that listed companies in SME board are generally having the problem of inefficient investment and most of them behaves as the lack of investment.Although the number of listed companies with excessive investment is relatively less than lack of investment,its inefficient investment degree is more serious.The equity incentive can effectively restrain the company's excessive investment and alleviate the listed company's lack of investment.In the case of excessive investment,there is no obvious differences in restraining excessive investment by using restrictive stock or stock option.While in the case of lack of investment,the usage of restricted stock works better than stock option.