Stickiness Of Executive Compensation,financing Constraints And Inefficient Investment

Investment is an important driving force for the transformation of scientific and technological development,as well as an important factor for promoting national innovation and development and enhancing scientific and technological strength.Enterprises,especially high-tech enterprises,are playing an important role in implementing the strategy of innovation-driven development.Among the GEM listed companies,high-tech enterprises with high innovation capacity account for the largest proportion,which have a great contribution to improving China’s scientific and technological strength and enhancing core competitiveness,and their investment efficiency cannot be ignored.Under the separation of the two rights of modern enterprises,the management level holds the dominant right of the enterprise’s operation and management,and controls the decision-making of the enterprise’s innovation investment project.Due to the existence of the principal-agent relationship,in order to enable senior executives to make optimal investment decisions and enhance corporate value,enterprises link the compensation of senior executives with corporate performance when formulating compensation plans,so as to make the interests of management and shareholders consistent.However,the compensation system strictly linked to performance inhibits the enthusiasm of senior executives to carry out innovative investment activities,which is not conducive to the long-term development of enterprises.Therefore,some scholars put forward to tolerate short-term failure of senior executives to encourage their risk-taking spirit.A large number of studies have confirmed that Chinese listed companies have a tendency to "reward the good and not punish the bad" when setting executive compensation,which is easy to induce moral hazard and adverse selection of senior executives and damage the efficiency of enterprise investment.At the same time,due to the large capital demand and high risk,GEM listed companies face a high degree of financing constraints.On the one hand,financing constraints will make it more difficult for enterprises to obtain investment funds;on the other hand,they can exert external supervision on senior executives,thus affecting the stickiness of executive compensation and inefficient investment.Based on the principal-agent theory,information asymmetry theory,optimal contract theory and pecking order financing theory,this paper analyzes the influence mechanism of the stickiness of executive compensation,financing constraint and inefficient investment.Taking listed companies on GEM as research samples,a research model of the relationship between stickiness of executive compensation and inefficient investment is constructed.Meanwhile,the influence of financing constraints on the relationship between stickiness of executive compensation and inefficient investment is explored by taking financing constraints as moderating variables.Finally,the heterogeneity test is conducted by distinguishing property rights.The empirical results show that:(1)The stickiness of executive compensation is common in GEM listed companies,and the stickiness level is high.The tendency of enterprises to "reward and punish" senior executives is more and more obvious,and the stickiness of executive compensation in non-state-owned enterprises is slightly higher than that in state-owned enterprises.GEM listed companies have a higher degree of inefficient investment,and compared with state-owned enterprises,non-state-owned enterprises have more serious inefficient investment.The financing constraint level of GEM listed companies is deepening,and they are faced with serious financing dilemma.(2)The influence of stickiness of executive compensation on enterprises’ inefficient investment shows a U-shaped relationship.When the stickiness of executive compensation is less than the inflection point,the increase of the stickiness of executive compensation will help reduce the level of inefficient investment.When the stickiness of executive compensation is greater than the inflection point,the level of inefficient investment will increase with the increase of the stickiness of executive compensation.(3)Financing constraints help smooth the U-shaped relationship between stickiness of executive compensation and inefficient investment.(4)Compared with state-owned enterprises,there is a U-shaped relationship between stickiness of executive compensation and inefficient investment of non-state-owned enterprises,and financing constraints will have a significant negative impact on the relationship between stickiness of executive compensation and inefficient investment of enterprises.In view of the above research conclusions,combined with the actual situation,this paper puts forward the following suggestions: construct the executive compensation mechanism combining incentive and restriction;Broaden the financing channels of enterprises and strengthen the supervisory role of external financing;We will strengthen the performance assessment of state-owned enterprises and give full play to the active role of the compensation mechanism.