Internal Governance Of Senior Management Team And Inefficient Investment Of Enterprises

In China’s economic development enterprises are in an important position,so the enterprises’ investment efficiency also plays role in the whole society’s investment efficiency to a certain extent.However,presently,most enterprises have caused inefficient investment problems including over-investment and under-investment due to principal-agent problems,information asymmetry problems,financing constraints and irrational behavior of managers.This inefficient investment method leads to the unjust allocation of company resources,damages enterprises’ value,and is adverse to the enterprise economy’s sustainable growth.So,the research on the governance of inefficient investment in enterprises has become the focus of some scholars.However,the existing research on the inefficient investment’s governance mainly center on the constraints of internal and external supervision and restraint mechanisms on executives’ behavior,and regards the top management team as a whole with common interests,while ignoring the heterogeneity of interest preferences of the top management team members and the internal governance effect of the top management team.This paper studies the inefficient investment’s governance factors from the internal governance effect brought by the heterogeneous interests preference of the senior management team’s internal members of view.This paper’s research sample is the 2010 to 2019 enterprise data of listed companies in China,this paper uses panel data model and makes an empirical study on how can the internal governance of TMT makes affect on the inefficient investment of enterprises.Results show:(1)the internal governance of TMT can effectively restrain the enterprises’ over-investment and under-investment;The bottom-up internal supervision and governance of the top management team restricts the self-interested and short-sighted CEO to a certain extent,which is contribute to improving the enterprises decision-making’s efficiency and restraining the enterprises’ inefficient investment behavior.(2)The traditional corporate governance’s supervision and incentive mechanism can also restrain the enterprises’ inefficient investment behavior,but it is differ to the internal governance of senior management team that has a strong inhibitory effect on both over-investment and under-investment.The supervision mechanism of traditional corporate governance mainly plays a role in the governance of over-investment behavior of enterprises that is easy to find and identify,while the incentive mechanism of traditional corporate governance mainly plays a role in the governance of under-investment behavior of enterprises with certain concealment.(3)The internal governance of TMT has different governance mechanisms for over-investment and under-investment.The internal governance of the top management team can effectively limit the overconfidence and risk-taking behavior of CEO,urge CEO to make more stable scientific decisions,and then restrain the enterprises’ over-investment behavior;And by alleviating the corporate financing constraints’ degree suppress the level of corporate investment deficiency;(4)In private and higher technology intensity enterprises,the top management team’s subordinate executives have stronger supervisory ability,and the top management team’s internal governance can restrain the enterprises’ inefficient investment more significantly.From the heterogeneous interests preference of TMT’s point of view,this paper studies the TMT internal governance effect on enterprise inefficient investment,enriches the literature of TMT internal governance and related research on enterprise inefficient investment governance,provides a theoretical basis for the governance mechanism of TMT internal governance on inefficient investment,and also make recommendations for enterprises to build a rational team governance mechanism and improve enterprise investment efficiency.