Research On Equity Incentive,internal Control And Non-efficiency Investment

The investment activities of enterprises are not only related to their own development,but also closely related to the economic growth of the whole country.At present,China's economy has entered the new normal,the new requirements of economic development and the limitation of resources require rational allocation of resources in all aspects.Investing in projects which net present value is less than zero forms over-investment,which will detract from shareholders' wealth and waste of resources.Without investment in projects with net present value greater than zero forms under-investment and misses development opportunities.Over-investment and under-investment are both inefficient investments.A large number of studies show that the phenomenon of inefficient investment of listed companies in China is still serious.Equity incentive is helpful for managers to pay more attention to the long-term development of enterprises,to consist the interests of managers with the interests of shareholders and alleviate the principal-agent problem.The equity incentive system of our country has entered the substantive stage of operation since 2006.The listed companies that implement equity incentive are on the rise.Is equity incentive helpful to restrain inefficient investment?Based on the relevant data of A-share listed companies in Shanghai and Shenzhen Stock Exchange from 2012 to 2017,this paper established a regression model and empirically tests the effects of equity incentive and equity incentive contracts' characteristics on inefficient investment.And the intermediary role of internal control to restrain the inefficient investment of enterprises.It is found that equity incentive can inhibit over-investment but not significantly.Equity incentive plays a significant role in alleviating under-investment.The greater the incentive intensity,the stronger the effect of relieving under-investment.Comparing with the restrictive stock incentive,stock options will play a more significant role in alleviating under-investment.The implementation of equity incentive in a company can significantly improve thequality of internal control,and alleviating the lack of investment thereby this way.