Research On Executive Power And Overinvestment Of The State-owned Enterprises

In the enterprise, investment decision determines the long-term development of the strategic direction of the enterprise. The discretion of the enterprise investment efficiency not only affects value that the enterprise itself can create in the future, but also is directly related to the long-term well-functioning of market economy, and it is under the influence of the executive power. Management in the enterprise are the core link of connecting the various levels of contract relationship, executive power is reflection after thinking game among management, rights and interests of the main body such as the internal owners, external creditors that are able to influence corporate decision-making and internal corporate governance structure.Meanwhile, based on the special nature of property rights of state-owned enterprises different from general private enterprises, as well as the gradual decentralization reform to state-owned enterprises, executive power with the CEO as the core gradually formed and strengthened within the listed state-owned companies, overinvestment issue has also caught the concern and attention by the auditor, in 2013 the national audit office disclosed 10 state-owned financial statements audit results, the results showed that large state-owned enterprises still exist excessive investment and investment losses, in the process of decision-making, some executives, may had been suspected of abuse of power and it leads to unequal power and responsibility, make blind decision, and damage the interests of shareholders, therefore, it is necessary to proceed from the perspective of the novel executive power to explore the phenomenon of overinvestment in state-owned enterprises whether related to the gradual strengthening executive power and showing what kind of the relationship, and the state-owned enterprises are divided into state and local state-owned enterprises based on the difference of control to study the correlation between the executive power of state-owned enterprises at different control levels and overinvestment,and that is what this article mainly aimed on.Thesis uses the listed state-owned companies in the A-share market as the research object, by adopting the combination of standardized analysis and empirical research methods, selecting 2009-2013 five consecutive years of annual data to use models that paper constructed to the correlation between executive power and overinvestment of state-owned enterprises making empirical regression tests to make the following conclusions:(1) the listed state-owned companies exist overinvestment behavior; (2) when the CEO in the state-owned enterprises serves as a director or chairman of the board of directors, he is more inclined to use his authority of his office for overinvestment behavior; (3) when CEO has higher education level, he more easily takes advantage of the professional authority to overinvestment behavior; (4) the higher the equity dispersion, the more easily leading to overinvestment due to management facing the less equity checks and balances; (5) executive power and overinvestment in the state-owned enterprises has a significant positive correlation, the greater the executive power, the management for the power rent-seeking to induce the greater probability of state-owned enterprises overinvestment; (6) based on different levels of control of the state-owned enterprises, compared with local state-owned enterprises, there is the more positive correlation of executive power and overinvestment in the state. Finally, based on the results of thesis, the paper make the recommendations how to restrain management use his authority for overinvestment in order to improve the efficiency of investment from the two aspects of the market as a whole and the enterprise itself.