The Influence Of Executive Incentive Contracts On Corporate Investment Efficiency

The impact of executive incentive contract on corporate investment efficiency has caused widespread concern by the academic and practical.But most of existing researches focus on the discussion of single incentive mechanism.In recent years,scholars have begun to pay attention to the unique properties and mechanism of implicit incentives.Therefore,this paper uses the explicit-implicit research paradigm,with executive compensation incentive and control right incentive as the starting point,and investigate the impact of executive incentive contract on corporate investment efficiency.We also examine the adjustment of executive traits.Under the framework of principal-agent theory,this study mainly uses incentive theory and upper echelons theory to discuss the relationship between executive incentive contract and corporate investment efficiency.Then we use 497 listed companies 2012-2016 panel data to conduct empirical research.This paper focus on the following three aspects.First,based on the comparison of unique attributes and roles of executives explicit and implicit incentive contracts,this paper analyzes the impact of the executive incentive contracts on corporate investment efficiency.Secondly,according to upper echelons theory,this paper discusses the adjustment of executive traits on the relationship between executive incentive and investment efficiency,and forms the contextual model.Finally,this paper expands previous researches about executive traits,and reveals the adjustment of executive psychological traits.The empirical findings demonstrate that executive compensation incentives and investment efficiency is positively correlated.And we also document a strong positive relationship between control right incentives and investment efficiency.Executives age plays a positive regulatory role between executive incentive and investment efficiency,but plays a negative regulatory role between control right incentive and investment efficiency.That is,the higher of executive's age,the facilitating effect on compensation incentive and investment efficiency is more obvious;however,the positive influence of control right incentive on investment efficiency is weakened by executive's age.Executives overconfidence has negatively regulation effect on compensation incentive and investment efficiency,and also has negatively regulation effect on control right incentive and investment efficiency.That is,with the increasing of the overconfidence level of the executives,the promotion effects of two types of executives incentive contracts on investment efficiency are weakened.According to the research conclusions,this paper proposes executive incentive contracts that can help improve corporate investment efficiency,and measures that can improve the construction of executive management teams.Specifically,one is to further improve the executives incentive mechanism,and give full play to the promotion effect of executives incentives;and second,adjust and allocate a reasonable ratio of executives management team age,and implement different executives incentive contracts according different age stages.Third is to attach importance to the psychological factors of executives and guide their overconfidence level within a certain range.