Over-investment In Listed Companies

Investment has always been one of the most important ways for enterprises to expand and develop.Different enterprises have different investment strategies.With 40 years of reform and opening-up,our country has experienced long-term economic rapid development,economic aggregate ranked second,people's quality of life is also get a significant boost,but under the situation of our country,with the high-speed economic development at the same time,also produced many new problems,such as investment efficiency is low,the serious problem of redundant construction,the phenomenon of excessive investment still exist,the lower the efficiency of the economy and the vigor,did not make the economy to exert the function of serving for the real economy,but also harm the interests of many small and medium-Sized investors.2018 session of the 13th at a meeting of the National People's Congress,prime minister Li Keqiang pointed out the government work report,our country economy from high-speed growth stage to high quality development phase,which requires the enterprise investment in high efficiency and high quality,but at present,the low efficiency of corporate investment,economy and high quality run counter to the goal of economic development in our country,thus the research enterprise investment strategy,investment cause,improve the investment environment of enterprises,in turn,change enterprise investment strategy,which is of great significance.Overinvestment,that is,overinvestment refers to an inefficient investment decision-making behavior that accepts investment opportunities that are not optimal for the value of the company,especially projects whose net present value is less than zero,thus reducing the efficiency of capital allocation.For ideal enterprise,the enterprise should not exist excessive investment,namely all investment can bring satisfied the net present value of inflows,but due to information asymmetry,the upper echelon theory,agency theory and other factors,makes enterprise investment decision makers when making decisions,face the personal interests and the interests of the enterprise is not unified,or personal interests and the interests of the investors,in some cases,can cause policymakers tend to gain for themselves when making decisions,at the expense of the enterprise or the interests of investors,will cause the enterprise investment of some net present value less than zero or mergers and acquisitions,that leads to excessive investment.This paper mainly studies the causes of enterprises' excessive investment,and studies the influence of decision-makers' personality characteristics and enterprise characteristics on enterprises' investment behaviors from the perspectives of managers' behavior and enterprise factors.In order to identify the causes of different decisions made by decision makers,we analyzed several personality traits of managers,including age,educational background and personality,especially the influence of aggressive personality on overinvestment.Here,we use the facial width-to-height ratio(fWHR),a metric used in many foreign literatures,to measure the radical personality of decision making.This paper use the data of a-share listed companies in Shanghai and Shenzhen from 2007 to 2016 as research samples to empirically test the influence of aggressive personality characteristics of management on corporate investment strategy,and also discusses the influence of corporate characteristics on investment strategy.In this study,investment strategy mainly involves excessive investment,but previous studies have shown that cash holding and excessive investment tend to show a positive correlation,that is,enterprises with more cash holding are more likely to make excessive investment,so this paper also takes cash holding as one of the manifestations of investment strategy.In addition,the enterprise investment will also restricted by enterprise leverage,so that managers personality traits for an enterprise to leverage also can produce certain effect,on the other hand,the previous study also found that excessive debt situation is more serious,easier to excessive investment,so we will also be one of the set to explore the dimension of the investment strategy.In a word,this paper mainly studies the investment behavior of enterprises with excessive investment,supplemented by cash holding and excessive debt behavior,and explores the role of managers' personality characteristics in the investment strategy of enterprises.Managers according to its position is different,we divided into general manager and chairman of the board of directors,through empirical test,the research results show that the measuring management character radical degree of facial width-to-height ratio proxy variables significantly positively related to excessive investment,with the enterprise cash holdings facial width-to-height ratio signifieantly negative correlation with manager,excessive debt ratio of high to width and managers face significant negative correlation.In the above three different enterprise indicators,this paper also found that different positions have different influences on the key indicators of the enterprise.In detail,the aggressive personality of the chairman has more obvious influences on the excessive investment and cash holding of the enterprise,while the general manager has more influences on the excessive debt.Furthermore)according to the nature of enterprises,this paper divides them into private enterprises of state-owned enterprises.It is found that different characteristics of enterprises may have different influences on different financial indicators.The significance of this study is that when studying the influence of corporate managers on corporate behavior,it takes into account the new perspective of managers' personality traits,and proves that it is feasible to use the facial width-to-height ratio as a proxy variable to measure managers' personality traits to study corporate behaviors in China.At the same time,this paper has certain enlightenment significance for us to better understand the investment behavior of companies,for the humsan resource management of listed companies,and for strengthening the selection of senior executives such as the chairman of the board of directors.