Inefficient Investment And Business Executives Background Relation Research

Investment decision is one of the most important financial decisions, which involves the financing behavior and directly affects the enterprise of dividend distribution policy. Investment activities are also the important influence factors to enhance corporate value and decide the development foreground of enterprise. The efficiency of investment has become the focus of attention in the theoretical and practical research. The mainstream research of investment behavior provide methods to improve the situation of over-and under-investment that mainly through broadening the financing channels and enhance corporate governance, which based on the "rational economic man" hypothesis, and the foundation of the agency theory and the asymmetric information. In China, not only internal governance, but also capital markets are imperfect. In the special background, these methods play little role in improving the inefficient investment. With the development and promotion of Behavioral Finance Theory and Upper Echelons Theory, scholars give up the original assumptions, with the "limited rationality" as the foundation which is more close to reality, trying to seek the roads to improve the efficiency of investment through the view of micro-enterprise. At present, from the perspective of behavioral finance research has made some achievements, but the research based on theory of The Upper-echelons Perspective is still in the early stage. Therefore, this paper attempts to learn from the Upper Echelons Theory, study the relationships between top management team characteristics and the efficiency of investment, in order to provide the clues for reduce the degree of inefficient investment.This paper firstly reviews overseas and domestic relevant literature of investment in three different perspectives, which are the top managers’motivation, psychological characteristics and managers’ characteristics, and from2007to2011, it takes the listed company as an object, also verifies the existence of the inefficient investment. The results showed that, overall, the investment efficiency of listed companies in China is not optimistic; there are different degrees of non-efficiency of investment conditions. Among them, the under-investment compared to the over-investment is more serious. Measuring of deviation from the optimal level of investment, based on the cognitive theory and upper echelons theory, theoretical analyzes the correlation between the background characteristics of top management team and the efficiency of investment, and empirical tests the effects of the background characteristics of top management team,example for CEO, such as age, tenure, gender and size on investment efficiency. The results showed that, the background characteristics of top management team have some effect on investment efficiency. Specifically, the average age of the executive team have significant negative effect on inefficient investment, the average education degree also have negative effect on inefficient investment. By means of subgroup test of state-owned enterprises and non state-owned enterprises, finds that the validity of conclusions may vary based on the nature of enterprises, TMT characteristics in state-owned enterprises have stronger explanatory power compared to non-state enterprises. The average age of TMT in the state-owned enterprises has negative effect on inefficient investment, the average tenure has positive effect on inefficient investment. Finally, according to research findings, the study provides some suggestion for improving the situation of investments by optimizing the executive hiring mechanism and the existing top management team.