An Empirical Study On The Impact Of Executive Compensation And Internal Control On Non-efficiency Investment

Investment is an important activity in the business process,which is related to the value added of the enterprise and the sustainability of development.Therefore,optimizing resource allocation and improving investment return is the company's goal.However,in the real market,due to various factors such as agency conflict and information asymmetry,the investment of enterprises deviates from the optimal investment level,causing non-efficiency investment phenomena such as excessive investment and insufficient investment,resulting in great waste of social resources.As an important link connecting owners and managers,executive compensation can alleviate agency problems,encourage managers to better perform their duties,improve investment efficiency,and achieve corporate goals.Internal control is an important supervision and management mechanism for corporate governance.To a certain extent,it inhibits the self-interested behavior of managers who deviate from the shareholders' goals.As an incentive mechanism,internal control as a kind of supervision and restraint mechanism,the combination of the two can better improve the corporate governance structure,ease the agency problem,and then improve the effectiveness of investment decisions and inhibit non-efficiency investment behavior.Therefore,linking executive compensation with internal control to examine the impact and mechanism of non-efficiency investment not only has important theoretical significance,but also has certain practical application value.This paper selects the sample data of A-share listed companies in Shanghai and Shenzhen from 2010 to 2017,and adopts a combination of normative research and empirical research.It first conducts normative analysis and defines the concept of executive compensation,internal control and inefficient investment.Then,based on the theory of principal-agent theory and information asymmetry theory,the hypothesis is put forward.The final empirical study examines the impact of executive compensation on non-efficiency investment,the impact of executive compensation on internal control,and further introduce internal control as an intermediary variable into the impact of executive compensation on non-efficiency investment,and study its mechanism of action.After descriptive statistics and correlation analysis,the paper draws the following conclusions:(1)Most of the listed companies in China have non-efficiency investments,and the investment is less than excessive investment;(2)the executive compensation is negatively related to the non-efficiency investment,and the compensation Incentives can effectively inhibit non-efficiency investments;(3)executive compensation is positively related to the internal control of the company,and compensation incentives can promote the effectiveness of internal control;(4)internal control between executive compensation and non-efficiency investment To the mediation effect.Reasonable salary incentives can effectively promote the effectiveness of internal control of enterprises,and better suppress non-efficiency investment behavior through internal control.Based on the above empirical research conclusions,combined with China's current national conditions,this paper puts forward the following suggestions: improve the corporate executive compensation incentive system,establish a diversified salary incentive mechanism;strengthen the internal control information disclosure,improve the quality of internal control;strengthen the corporate executives The construction of incentive and restraint mechanisms helps enterprises to improve the effectiveness of investment decisions and reduce non-efficiency investment behavior.