Insider Control, Financial Governance And Irrational Investment Behavior Of Enterprises

The report of the Nineteenth National Congress of the CPC pointed out that the economy should be transformed from high-speed to high-quality development,and rational investment of enterprises should be advocated.Under the background of global economic downward pressure,unilateralism and trade protectionism,it is very important to improve the quality of investment and reduce irrational investment behavior for the development of enterprises.But nowadays,irrational investment is a problem that almost every listed company will encounter and need to be solved urgently.In view of the important influence of insiders on the investment decision-making of enterprises,especially in enterprises with prominent insider control problems,internal directors and executives are likely to violate the goal of maximizing the value of enterprises based on their own interests.Discussing the influence of insider control on irrational investment,the regulatory role of financial governance as a financial aspect of corporate governance on irrational investment,and the influence of property right nature and agency cost on the role of the three have certain theoretical value and practical significance.Taking non-financial A-share listed companies from 2009 to 2017 as samples,this paper uses the ordinary least squares method(OLS)and the fixed effect analysis method(FE)to analyze.The results show that the degree of insider control is significantly positively correlated with irrational investment behavior.Financial governance has a significant inhibitory effect on the irrational investment behavior of insider-controlled enterprises.Compared with underinvestment,it has a significant impact on investment.Excessive inhibition is more obvious.Further research shows that the interaction between financial governance and insider control has a significant inhibitory effect on irrational investment behavior of state-owned enterprises,but this inhibitory effect is not good in private enterprises.At the same time,in the enterprises with lower agency costs,the interaction between financial governance and insider control has obvious inhibitory effect on irrational investment behavior,but in the enterprises with higher agency costs,this inhibitory effect is not significant.The insider controls the enterprise,the insider is inconsistent with the goal of the enterprise.The insider who holds the decision-making power can dig his own benefit "tunnel" through irrational investment.The perfect financial governance mechanism can effectively regulate the insider's behavior and operation procedure,restrain the insider's private interest behavior to a certain extent,form an effective supervision mechanism,and reduce irrationality.Investment.The research on insider control,financial governance and irrational investment enriches the existing research contents,innovates the measurement methods of the degree of financial governance and insider control,enriches the theory of financial governance,and provides reference for enterprises with insider control problems to formulate reasonable investment strategies.