The Impact Of Management Risk Preference On Inefficient Investment

Investment is one of the important business activities of the growth and growth of enterprises.The discussion of inefficient investment in academia and practice has not been stalled.It has been shown that management decision-making is not only a project that been considered as the net present value of investment in order to achieve the continuous growth of corporate value,but also by the degree of risk acceptance.Management of different social characteristics will respond differently to the same problem,and even make different decisions due to differences in risk appetite.At the same time,due to information asymmetry and principal-agent issues,management self-interest behavior will lead to management's irrational decision-making,will undoubtedly have a significant impact on the company's investment efficiency.Taking into account the above factors of the impact of inefficient investment,this paper first combs the domestic and foreign literature to lead the research problem,defines the risk preference and the inefficient investment,and expounds the high level echelon theory,the foreground theory and the principal-agent theory in this paper.The theory of management risk preference the impact of inefficient investment mechanism.At the same time,in order to reduce the problem of inefficient investment,this paper introduces the equity incentive variables and explains the mechanism of equity incentive on the role of both.And then use the multivariate statistical analysis to test the influence of the management risk preference on the inefficient investment and the effect of the equity incentive on the management risk preference.Finally,the robustness test was carried out to further determine the results.The preliminary results show that the risk preference of the management is positively related to the over-investment and negatively related to the investment.This indicates that the greater the risk appetite of the management,the more the enterprise invests excessively;the smaller the risk appetite of the management,the greater the likelihood of the firm's lack of investment.Further research shows that:equity incentive is conducive to curb the impact of management risk appetite on the excessive investment,reduce over-investment;the same time,equity incentive is also conducive to curb the management of risk appetite for the lack of investment,ease the lack of investment.This shows that equity incentive to the management of risk appetite affect the inefficient investment has a good regulatory role in the implementation of equity incentives for management,is conducive to ease the inefficient investment of listed companies,so as to effectively play the role of corporate governance.