The Study Of Agency Cost, Managerial Ownership And Inefficient Investment

Investment is not only one of the most important decisions of a company, but also affects the macroeconomic operation and development of capital market. Entrust-agent conflict is one of the important reasons that lead to inefficient investment behavior. Giving a certain percentage of shares to manager level is one of the important ways of equity incentive, and the manager level who hold shares can tend to be more consistent with principal to a certain extent in interests, further reducing the inefficient investment motivation, which could play an important role in alleviating the agency conflict between them. In this paper, empirical analysis method was employed to study the agency cost, management equity and inefficient investment. Chinese a-share listed companies were used as research samples, and the audited annual report of 2009-2013 for the data source, so that the factors causing inefficient investment and effective inhibition factors were studied by taking the absolute value of residuals in Richardson (2006) model as the interpreted variable.The results show that the inefficient investment behavior of a-share listed companies is universal, and most enterprises were characterized by inadequate investment; Agency cost was in significantly positive correlation to inefficient investment; Management equity was in non-obvious negative correlation to inefficient investment;Manager level holding certain shares can effectively inhibit the positive correlation between agency cost and inefficient investment, which will enable the enterprise to reduce agency conflict, inhibit excessive investment, help enterprise managers reduce risk and alleviate inadequate investment.