Research On The Influence Of CEO Power On The Company's Major Investment Decisions

With the acceleration of globalization and market-oriented reform,China's economy shows a rapid development trend.Investment,as one of the "troikas" driving economic growth,has made irreplaceable contributions to China's economic transition and structural adjustment.In 2013,President Xi Jinping put forward the national strategy of "one belt and one road",aiming at creating a good investment environment for our country and even the surrounding countries by strengthening regional economic cooperation,breaking investment barriers and trade barriers,so as to better play the role of investment in stimulating economic growth.With the development of national policies and market reforms,the investment convenience of Chinese enterprises has been continuously improved and the investment environment has been continuously improved.At the same time,the Sino-US trade war and the wave of anti-globalization have made China's economic transformation face threats and challenges,and also made Chinese enterprises face many challenges in the investment environment and investment decision-making.From the micro level of the enterprise,the investment decision-making,especially the major investment decision-making is very important for the development and value promotion of the enterprise.And the management who has the right of decision-making can often exert influence on some important investment decisions.In particular,CEOs at the top of the hierarchy structure have natural information and position advantages in the management team,and are more likely to influence the company's major investment decisions by influencing the formulation of investment plans and voting of the board of directors.Relevant research shows that CEO power can affect the company's investment decision-making.When CEO power is too large,enterprises are more likely to make extreme or irrational decisions,which will damage the company's interests and even affect the long-term development.Therefore,how to reasonably allocate the power of the management,especially the power of the CEO,so as to alleviate the agency conflict,promote reasonable decision-making,and maximize the value of the company has been a hot topic in academic circles.Based on principal-agent theory,management power theory and rent-seeking theory,this paper selects all A-share listed companies in Shanghai and Shenzhen stock markets from 2007 to 2017 as research samples,and uses the combination of normative research and empirical research to analyze and empirically explore the impact of CEO power on major investment decisions of the company,as well as major investment decisions of the company under the influence of different CEO power intensity.From the perspective of internal control quality and analysts' attention,this paper explores the governance effect of internal and external governance on CEO power and major investment decisions.The results show that:(1)the greater the CEO's power is,the more likely the company is to make major investment decisions,and the higher the frequency of major investment decisions;(2)compared with the smaller CEO's power,when the CEO's power is greater,the company's major investment decisions have a more significant adverse impact on its performance,which indicates that the CEO's power is too large,which may lead to major investment decisions.It is an irrational decision-making of power for personal gain,which does not meet the goal of maximizing the company's value;(3)the higher the quality of the company's internal control,the more effective it is to restrain the negative impact of CEO's power on the company's major investment decision-making,indicating that the internal control can play a corresponding governance role in mitigating the company's irrational investment decision-making;(4)the higher the analyst's attention to the company,the more It can effectively restrain the negative influence of CEO's power on the company's major investment decisions,which indicates that the securities analysts can play an effective role of external supervision in corporate governance,and reduce the CEO's irrational investment decisions.Based on the summary of previous research results,the research of this paper has expanded and deepened the research on CEO power and corporate investment behavior,further enriched the research fields of management power and corporate investment decision-making,deepened the understanding and understanding of principal-agent theory and management power theory and other related theories,and has strong theoretical significance.At the same time,this paper puts forward corresponding management suggestions from different levels such as enterprise and market to reasonably allocate CEO power,strengthen internal and external supervision and governance mechanism of enterprise,which is of great practical significance for guiding enterprise practice,effectively supervising and balancing management power,guiding management to make reasonable decisions,easing agency conflicts between management and shareholders,and improving enterprise value.