| On August 29,2014,thenew《The Compensation Reform Plan of the Central Enterprise’s Manager》has passed the meeting, and it will be implemented in early 2015.The discussion about the central enterprise’s executive pay reform plan becomes the focus of heated debate, and the topic of thecompensation regulation once again attracts wide attention by scholars.According to the previous research that modern enterprises due to the separation of ownership and management, whichresults in most companies there is a serious agency problems,one problem is inefficient investment issues, the specific performance is overinvestment and underinvestment.To design a reasonable compensation incentives system for executives,which can suppress the inefficient investment behavior.Firstly, the paper sorts out the executive pay levels and inefficient investment behavior research achievement at home and abroad, and reviewed the relevant theoretical basis;Secondly, drawing on the basis of previous studies, and based on the theory analysis, proposes two hypotheses of this paper.Thirdly, this paper usesthe Shanghai and Shenzhen A-share listed companies from 2010 to 2013 of 3176 data as the study sample,whichconstructs the expected investment model, find it that it’s common in listed companies of China, especially in the more general underinvestment.Then select the expected investment return of residuals model as overinvestment and underinvestment proxy variables to find the influences betweenexecutive monetary compensation and non- efficiency investments.Then,Combines with our unique circumstancesand dividesthe full sample into state-owned holding companies and non-state-owned holding company of two sub-samples, use the empirical analysis to test the impact between state-owned holding enterprises and non-state-owned holding company executives compensationand inefficient investment behavior.The main conclusions are:(1)China’s listed companies existinefficient investment problem. According tothe statistics, in 3176 of the sample the overinvestment the sample in the sample had 993, accounting for 31.27% of the total sample; underinvestment sample has 2183, accounting for 68.73% of the total sample, it shows that China’s listed companies exists underinvestment.(2) In the state-owned holding companies, because of the special institutional background, there is a negative correlation between state-owned enterprises executive pay levels and overinvestment & underinvestment which are two inefficient investment behavior.The conclusion shows that in the state-owned enterprises the executive compensation for their motivation to induce non-efficiency investment is less likely.(3) In the non-state-owned holding companies,there is a positive correlation betweenexecutive pay levels and overinvestment & underinvestment which are two inefficient investment behavior.The conclusion shows that in the non-state-owned enterprises due to the presence of information asymmetry and agency problems, the level of executive pay is fully linked to the corporate performance which is more likely to induce executives inefficient investment behavior.Based on the conclusions of the paper, it puts forward some suggestions, which wants to improve the company’s executive compensation levels and improve investment efficiency. |
