Research On The Impact Of Executive Compensation At Different Stages Of Life Cycle On Enterprise Investment Efficiency

As one of the three major activities in the operation of a company,the efficiency of investment activities will not only affect the company's book returns,but also determine the company's future development and enterprise value,and also have an important impact on the sound and healthy development of China's economy and society.When the salary system formulated by the company is unreasonable,the management as an economic person will put their own interests first,rather than considering the interests of the company,the two will inevitably conflict.This is reflected in the inefficiency of investment activities.At different stages of the company's life cycle,the relationship between the two is different.Therefore,it is of great theoretical value and practical significance to explore the relationship among enterprise life cycle,executive compensation incentive and investment efficiency.This paper combines the three aspects of enterprise life cycle,executive compensation and investment efficiency to study their correlation,focusing on the relationship between executive compensation and investment efficiency in each period,with a view to giving policy suggestions on improving the compensation system and management system at the level of corporate governance.Firstly,this paper collates the research on enterprise life cycle,executive compensation and inefficient investment at home and abroad,and reviews the related theories.Then,after comprehensive analysis and collation of the literature written by predecessors,it puts forward the hypothesis to be discussed in this article.Then,we select the data samples of all listed companies in Shanghai and Shenzhen stock markets from 2015 to 2017 and build four models.The first one is the investment efficiency measurement model,the second is the life cycle partition model,the third and fourth is the relationship between investment efficiency and executive compensation calculation model.The third and fourth are based on the first two,and the first result is selected.Residual value is the dependent variable of the latter two,and the enterprise life cycle value divided in the second model is chosen as the control variable and as the grouping index.This paper studies the relationship between executive compensation and investment efficiency,life cycle and investment efficiency,as well as the relationship between executive compensation and investment efficiency in different periods.The empirical results show that short-term salary,i.e.salary levelbelow the optimal incentive level,can restrain over-investment and alleviate under investment;long-term salary,i.e.executive stock ownership,can restrain under investment and alleviate over-investment.Companies in different stages have different corporate governance,financial indicators,etc.At the same time,they also have different agency problems.Generally speaking,the lower the enterprise life cycle is,the more serious the under investment is.In the early stage of the life cycle,the more serious the over investment is.With the dynamic change of enterprise life cycle,the governance effect of executive compensation on over investment and under investment is mainly reflected as follows: the governance effect of executive compensation on over investment is mainly concentrated in recession,and the governance effect on under investment is also mainly concentrated in recession.