The Study On Over Investment Based On Corporate Governance

In a perfect capital market that the enterprise agency costs do not exist in the ideal world, companies can achieve the optimal level of investment. However, the managers and the agency problem between shareholders, between controlling shareholders and minority shareholders, made the existence of agency problems which led to the problem of excessive investment. Jensen (1993) that the personal interests of managers with firm size increases, so managers maximize the benefits to individuals, there is a "manager empire" of the motives, about the company's net present value of investment funds into negative items. Due to the problem between shareholders and managers led agency problems. In recent years, with the rapid development of China's capital market, China's overheated investment in many industries significantly, the efficiency of investment in non-listed companies are serious, and over-investment behavior of business investment led to one of the important reasons is invalid. Over-investment behavior will affect the operating efficiency of the operation to bring a heavy burden on enterprises.This paper, through theoretical analysis, the existence of listed companies in China are analyzed the possibility of over-investment and corporate governance factors on the behavior of listed companies in China of over-investment. Secondly, a model of investment is expected of listed companies, listed companies estimated the expected investment spending, and further to over-investment spending. Through empirical testing, I found that in 3232 the Shanghai and Shenzhen Stock Exchange in the sample, there are over 1,350 investment behavior, and the extent of its over-serious. Finally, we joined the corporate governance variables, finding the factors that can reduce agency costs. By descriptive statistics and regression test showed that:(1) our system of independent directors of listed companies in the inhibition of over-investment behavior of managers less, equivalent to non-existent, did not play its proper role, however, the board of supervisors of listed companies for the suppression of acts of over-investment has played a positive role, constraints can be effective managers, board of directors of the over-investment behavior.(2) the study found that ownership concentration of listed companies compared to Western countries dispersed ownership is much higher, due to the absolute control of a few large shareholders of the status of minority shareholder interests can specify agents in their favor, so the major shareholders-agency problems between minority shareholders more serious, leading to the interests of major shareholders in their own predatory interests of small shareholders as the core, causing the company's over-investment behavior.(3) managers of listed companies that the management incentive compensation plan and management ownership, over-investment in the inhibition of behavior of listed companies to play an important role, effectively alleviate the shareholders-the manager's conflict of interest and reduce the opportunities for managers Marxist motivation.Finally, the normative analysis based on empirical research and put forward relevant policy recommendations;(1) Optimize the equity structure.2,3,4,5 bits should be increased before the proportion of major shareholders to form a large share of checks and balances between shareholders, listed companies in China over lower levels of investment.(2) Establish an independent director system. Independent directors should be strengthened to improve the proportion of the board of directors. Set of minority shareholders should be further strengthened supervisors and staff supervisor in order to guarantee a certain number of supervisors, and supervisors of listed companies in China to further improve the system, strengthen the responsibility of supervisors, so that the effective functioning of the board of supervisors to provide a guarantee.(3) Improve the manager's equity incentives. Effective incentive mechanism should be established so that an effective executive compensation tied to company performance, ease shareholder-manager conflict.