| The economy of our country development rapidly in recent years, the investment plays an important role. However, because of the defects in system and market, the growth of investment seems to be beyond the scope of reasonable level. Micro level of enterprise investment decision-making, reflected in the macro level of "economy overheating" and the "investment overheating" problems. The consequences of these problems have get the recognition of the social, low investment efficiency which in turn affect the macro and micro enterprise performance and value is largely caused by enterprise’s overinvestment behavior. Enterprise’s overinvestment in general refers to the enterprise did not follow its own growth trajectory and their resources and capabilities, to invest in projects of expected profit less than zero, which damage the value of whole enterprise.In company’s operation and management, investment decisions, financing decisions and dividend policy are very important in the decision process. The enterprise should deal with these problem to keep sustainable development. Investment behavior has a very important position in the enterprise. Financing decision determines the enterprise’s cost of capital,, which is the foundation of the enterprise business activities and investment activities. Reasonable financing strategies and the cost of capital can provide enterprises with certain advantages. And the result of investment will finally perform in enterprise value. When the production and operation of the enterprise reaches a certain level, the size of enterprise reaches a certain level, enterprise has a new development opportunities, often starts a high-speed expansion by means of investment. The expansion of the rationality of the approach will ultimately reflect on the value of the enterprise. Some enterprises invest blindly and pursue high expansion and development speed, and invest into some projects with negative net present value, may eventually lead to failure.In the process of creating value of the company, business activities is the basis of the enterprise to create value and intrinsic motivation, and investing activities can promote enterprise to create value, but the unreasonable investment may bring disaster to the enterprise. The analysis of the investment decisions of the company can be further linked to the enterprise funds, enterprise value and enterprise performance, can also be further linked to the corporate governance structure, the power configuration, etc. So the research of investment has an important meaning, which can not only rich the theory of enterprise value creation, in practice, can also guide enterprise’s financial policy practice, provide reference for the enterprise value maximization.Over investment behavior will not only affect the enterprise resource configuration, break the reasonable situation of enterprise production factors, will also gather the enterprise capital in some less profitable areas, enterprise resources are unused or wasted. Hard to take back bad loans. Eventually make the enterprise value maximization goal difficult to achieve, and even will reduce the enterprise value.In the value creation process of the company, senior executives, especially managers are at the top of the hierarchical structure, plays an important role in all decisions of the company, In the past, there were a lot of scholars researched the role of managers in enterprise value creation process, but few of them put the managers’ power into the empirical analysis. In addition, the reaserch of relationship between value of the company and the power of the managers is not sufficient. For the above problems, combining with the actual conditions of China’s listed companies, this paper reaserches the relationship between the action of over investment and the value of the company unde the power of managers, This paper provides a new perspective for the analysis of China’s listed company’s value creation. This paper emphatically study the influence of the excessive investment on the enterprise value, and introduced to the executive power, helping to understand the situation of excessive investment of listed companies in China and the influence on enterprise value, and what role have managers played in this process.In order to study the influence of the excessive investment on the enterprise value, and considering the role of executive power. This article firstly analysis the relationship between the three in theory, detailed described how excessive investment would affect the enterprise value, the role of executive power in business investment decisions, etc. On the basis of the theory foreshadowing for the research design, and carried on the empirical research. In the empirical part, firstly measured the overinvestment and the executive power. Secondly, test the influence of excessive investment’s on the enterprise value. Finally divided the sample into two groups according to managers’power, respectively tested the influence of excessive investment on the enterprise value in these two group.Based on the above ideas, this paper is made up of six parts. The first part is the introduction section of this article, first of all, described the background of this paper, and put out the research questions according to the background. Secondly, introduced the academic significance and practical significance of the study in this paper. Then introduced the content and design of full text in the form of a diagram. finally introduced the method and data would be used in this paper. The second part is the literature review part. Respectively summarized excessive investment, managers’power, the relationship between managers’power and excessive investment, the relationship between excessive investment and enterprise value. The third part is the theoretical basis and theoretical analysis. Respectively using contract theory and principal-agent theory, corporate governance theory and management theory to explains the theoretical foundation of this article. Final summarise these theorise, and analysed this paper theoretical. The fourth part was the studies design part. This section includes the content of the research hypothesis, the definition of the variables, and the use of econometric model and the way of sample selection. The fifth part is the empirical analysis part. including measuring results of excessive investment and research model of regression results the fourth part puts forward. The sixth part is conclusion and prospect. This part summarized the research conclusions obtained from above, put forward the policy recommendations for excessive investment and enterprise value on the background of managers’ power. At the same time, analysed the limitation of the article, and made suggestions for future research.Empirical study found that nearly40%of the listed companies in the sample had excessive investment problems, and the difference between different companies excessive investment scale of is very big. Research proves that the excessive investment did reduce the value of the enterprise. And when managers’ power is larger, the damage of enterprise value caused by excessive investment was more serious. In the process of research, this paper also proved that the debt and cash had an effects on excessive investment, cash holdings had a significantly positive correlation with excessive investment, debt levels had a significantly negative correlation with overinvestment.Investment activity as a key financial activities in a business, affect the survival and development of the enterprise, the reasonable investment can bring advantages of high yield and low cost to the enterprise to help the enterprise maintain the sustainable development, but the non-efficiency of investment could lead to the consequences of the opposite direction to the enterprise. In today’s overheated investment of listed companies, it is necessary to analyze the consequences, and study the influence factors of the phenomenon.The paper thougt that the enterprise should control excessive investment from the following three aspects to achieve the sustainable development of the enterprise. First of all, enterprise should plan the direction and scale of the future investment stand in the strategic. To avoid short-term behavior, enterprise should planning investment activities scientificly and reasonablely. Secondly, the enterprise should focus on the influencing factors of excessive investment, control cash holdings, reduce the managers’ use of cash to make excessive investment. Appropriate debt, Debt constraints will have restriction effect on over-investment, therefore the enterprise had a lower asset-liability ratio, can further improve the level of debt. Thirdly, we should establish a sound corporate governance mechanism, to alleviate agency problems between large shareholders and minority shareholders, to alleviate the agency problem between owners and managers, perfect the checks and balances between the board of directors, board of supervisors and management relationship. Make the enterprise the decision-making scientific, reasonable and properly implementation. Fourth, to properly control the power of the managers. Although give managers appropriate power can make manargers more active, create more value for the enterprise. But when managers’ power reaches a certain level, then there might be opportunities for them to do some damage to the enterprise value because of their own interests. How to implement effective mechanism of incentive and constraint for executives is a hot topic of current research, and more and more scholars only focusd on the way such as executive pay, equity incentive to executives, but ignores the managers may use other ways to get more personal interests due to high power. Finally the enterprise should set up managers’ assessment of the long-term mechanism to regulate and restrict managers’ investment behavior. The enterprise should not pay too much attention to the expansion of enterprise scale, and should pay attention to enterprise’s sustainable development ability. The enterprise should also incorporate the efficiency of investment activities into the scope of managers’ performance, strengthen the investment feasibility analysis, strengthen the supervision of managers’ investment behavior, reduce managers’opportunism behaviors in the investment.This paper theoretically analyses the managers’power how to affect the enterprise value through excessive investment, based on the actual situation of over-investment problem of listed companies in our country, this paper built the mathematical model and has carried on the empirical research, contributing to the further development of China’s corporate finance theory. Tested the influence of excessive investment’s on the enterprise value under different intensity of managers’ power. Put managers’power,over-investment and enterprise value into a research framework, and provided a certain reference to related theoretical research. On the other hand, this paper calculated excess investment of the Chinese listed companies from2008to2011, analyzed the excessive investment’s influence on the enterprise value of listed companies, analyzed the relationship between the excessive investment and enterprise value, promote enterprise for investment decision-making. Based on managers’power, analyzed the excessive investment’s influence on the enterprise value, provides a train of thought for our country’s listed companies to establish effective mechanism of managers’ power arrangement.The innovation of this paper is the introduction of the power of the manager to analyze the impact of excessive investment on enterprise value, and discussed according to the power of the manager group, proved that the impact of over investment on enterprises’value is different in different executive power intensity group. |
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