Research On Relationships Among Management Incentive, Executive Power And Investment Efficiency

Investment as an important way of resource allocation plays a significant role in the development of national economy. As a long-term strategic decision of enterprises, investment decision is important for growth of value, future development as well as national prosperity. Efficient investment is in favor of improving company governance and long-term development, while underinvestment or overinvestment may miss opportunity or waste resources. But in the investment decision-making process, non-efficiency investments decision may occur due to the presence of asymmetric information and agency problems, etc. Based on principal-agent theory, information asymmetry and moral hazard and adverse selection of management, managers may make inefficient investment decisions which damage the interests of shareholders. In this case, management incentive, giving managers a certain income and residual claims, obtains more attention considering it may get maximum agreed interests between management and shareholders and reduce agency costs consequently (Jensen, Meekling,1976). But in the theory of management authority, management can apply their will in the process of pay-setting, decision-making, supervision and execution so that they may exert influence on incentive effect of the efficiency of investment from management incentive mechanism. Due to the lack of management motivation on the efficiency of investment in domestic and international existing researches, combined with Chinese unique system, based on principal-agent theory, the optimal contract theory and management authority theory, this paper takes 2010-2014 A-share listed companies as the research object, explores and verifies the correlation of listed companies between management incentives and investment efficiency, and investigates the role of the management authority of the correlation constraints.This paper draws conclusions as follows:(1) Monetary compensation, stock option incentive, promotion incentives in management incentives will have a positive impact on improving the efficiency of investment. The impact of non-pecuniary compensation on efficiency of investment affect by property right character. (2) The management power will suppress the motivation of non-state-owned enterprise management incentive on the efficiency of investment. While it has no significant influence of non-monetary management incentives in state-owned enterprises on the efficiency of investment.