Managerial Power,Private Placement Of Equity And Executive Private Benefits

Since the form of a "franchise" corporate system in the 17th century,the modern enterprise system has gradually become mature and perfect after several hundred years of development.However,with the establishment of modern enterprise system,various kinds of agency problems caused by the separation of ownership and management rights of enterprises have also been constantly noticed by people.In-order to reduce the agency costs caused by the separation of ownership and management rights and promote the development of modern enterprise system,the academic circles conducted an in-depth theoretical analysis and discussion on the commission agency problem in order to alleviate agency conflicts through the new system design and contract theory.Among the many proposals put forward by domestic and foreign scholars,the theory of compensation contract is considered as an effective incentive method.Scholars believe that by optimizing the design of the remuneration system of the management,the interests of the company operator and the owner can be effectively unified so that the operator can act for the interests of the owner.As a typical representative of compensation contract theory-equity incentive,it also encountered many challenges in practice.We see that executive incentive has been all the rage in the listed companies,and many managers achieve the target of performance evaluation through earnings management during the implementation of the equity incentive plan,which damages the long-term value of the company and does not reduce the agency costs.Therefore,whether equity incentive programs can really inspire managers and reduce agency costs still need practical research.In recent years,the theory of management power has drawn the attention of scholars as a new theory,and scholars have tried to explain the challenge of the salary contract with the theory of management power.Management power theory that executives can use their own power for rent-seeking,thus reducing the incentive effect of remuneration,and the management of the greater the power of executives to influence their ability to remunerate stronger,so as to induce Businesses make irrational decisions.The principal-agent theory reveals the conflicts of interest between the managers and the owners of the company.The manager's decision-making activities aim at maximizing his own interests,and there may be potential conflicts of interests with the shareholders.Therefore,in the private placement of listed companies,management may exist to use their own power to induce enterprises to conduct non-rational issuance behavior.Private placement of equity is an important method of refinancing and is favored in the capital market.in 2016,624 listed companies in China's A-share market implemented private placements,raising funds to 1.81 trillion yuan.Compared with 2015,it increased by 31.39%,accounting for more than 90%of the equity financing amount for the year.The rapid development of private placement has received extensive attention.Scholars have conducted in-depth research and found that there are self-interested executives in the process of private placement,resulting in new agency problems,and seriously undermining the interests of the company's shareholders.This paper studies the private placement of listed companies based on the management power theory,analyzes the entrusted agency in private placement,reveals the influence of management power on the private placement decision of listed companies,and provides a new basis for management power rent seeking.Based on management power theory,rent-seeking theory,information mis-integration theory and principal-agent theory,this paper selects 1915 Shanghai-Shenzhen A-share markets from 2011 to 2015 as the research samples and refers to Lu Rui,Wei Minghai,and Li Wenjing(2008),Taking the combination of two positions,the term of office of the chairman or general manager and the degree of stock diversification as the measurement indexes,the author empirically tests the influence of management power on executive private benefits.Through the research,we finds that there is a significant positive correlation between private-equity executives and private placements in China's listed companies.Private placement can increase private-sector returns of executives.Further research finds that management power increases private-sector gains in private placements,indicating that management There is a self-serving behavior in private placements.Therefore,listed companies and regulators pay more attention to the self-interest of management during the company's private placement in order to better complete the capital market financing system and improve market efficiency.