The Effect Of The Faultline Of Board On The Corporate Inefficient Investment

Investment decision-making is one of the three basic decisions of an enterprise.It has a very direct impact on the profitability,operational risk and enterprise value of an enterprise.It is also a necessary guarantee for an enterprise to have a place in the market competition.However,in today’s economic environment,due to agency conflicts and information asymmetry,the phenomenon of "over-investment" and "under-investment" non-investment efficiency is very common in the investment behavior of Chinese enterprises.As the most important management and decisionmaking body of an enterprise,the board of directors is the central system of corporate governance.The quality of corporate decision-making is directly affected by the composition of the board of directors.Therefore,The composition of the board of directors is an important factor affecting the inefficient investment of enterprises.In the past,researchers mostly focused on the characteristics of board integrity,such as the proportion of independent directors,the size of board,etc.In recent years,some researchers began to pay attention to the individual characteristics of board members,such as academic qualifications,but most of the researchers studied the diversity of board members,that is,some or some characteristics in the board members.The number of categories neglects that board members are aggregates of multiple characteristics,which will lead to different subgroups within the board of directors,i.e.group fault zones.Based on the theory of social identity,this paper explores the impact of the fault zone on inefficient investment from the perspective of the board of directors group fault zone.Based on the A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2007 to 2017,this paper uses regression model to study the relationship between inefficient investment in enterprises by the break zone of corporate board of directors,and examines the role of the integration of chairman and general manager,as well as the adjustment of the proportion of shareholdings held by board members.This paper finds that there is a strong negative correlation between the board group fracture zone and the inefficient investment of enterprises.That is,the stronger the board group fracture zone is,the more able the board members can fully discuss it and restrain the inefficient investment behavior of enterprises.The smaller the strength of the board group fracture zone,the more inefficient investment behavior can be caused by over-investment and underinvestment.In the study of the role of the chairman’s two-position integration in the break zone of the board of directors and the inefficient investment behavior of enterprises,it is found that the chairman’s two-position integration does not have a significant moderating effect.In the study of the relationship between board shareholding and inefficient investment behavior,it is found that board shareholding can significantly inhibit the negative impact of board Shareholding on overinvestment,but not on underinvestment.This study broadens the factors of inefficient investment,enriches the research on the break zone of the board of directors,and provides some reference for the selection of board members in today’s enterprises.