Research On Listed Company Over-investment Effected By Top Management Characteristics, Leverage

With the growth of China’s market-oriented economy, many enterprises have been provided huge investment and expansion opportunity. but because of the multiplicity of influence factor in the managers’ decision action, many enterprises because of blind investment in different level appeared on the “investments overheat” phenomenon, then contributing to over-investment, which gives huge damage to enterprises’ value and its’ development. The liability is not only an essential approach of corporate finance, but also an important governance mechanism of inefficient investment. The research of leverage’s impact on corporate investment has been taken seriously in theoretical field. However, present research in this regard have not yet form a unified conclusion, meanwhile ignoring the impact of characteristics of top management team on enterprises’ overinvestment behavior. So, this paper theoretically analyzes and empirically examines the relationship between the leverage and over-investment from the point of view of the background characteristics of managers.This paper mainly adopts the method which combined empirical research with the analysis of theory. First of all, reviewed and appraised the former literatures on the top management characteristics, leverage and listed company over-investment. Then analyze the influence of the leverage and background characteristics of managers on over-investment from different aspects by referring relevant theories. In the part of this paper’s empirical studies, chose the research data of China’s listed companies during 2010 to 2013.After the analysis of the empirical study, this paper present the main conclusions as follows: first, leverage restrains over-investment and this relationship is more significance in the non-state-owned companies than in the state-owned companies. Second, top management team with more male manager shows the greater inhibition of leverage to over-investment, which exhibit no significant effects in the non-state-owned companies. Third, as managers grow older, and inhibition affect from leverage to over-investment show an inverted U-shaped relationship, which exhibit no significant effects in the non-state-owned companies. Fourth, Managers with higher education degree show greater leverage sensitivity, which lead to greater inhibition of promotion to over-investment. Fifth, manager term does not affect inhibition relationship of leverage to over-investment, which shows no difference between state-owned companies and non-state-owned companies. Meanwhile, relationship between leverage and over-investment is clarified by considering the background characteristics of managers. Then, it presents corresponding counter measures from the aspect of above research. These research findings are theoretically and practically significant to the Chinese corporate with regard to deepen the mechanisms of leverage and human resource management, and meanwhile provide decision references for enterprises’ investment.