Research On The Influence Of Managerial Ownership And Agency Cost On Over Investment

Investment decision-making plays an important role in the company's three major financial decisions.Effective investment related to the risk management,profitability and sustainable development of the enterprise,the problem of efficiency of investment is hiding behind the increasing investment,an related to the process of the enterprise to realize value-maximum,but the realistic level of investment tends to deviate from the optimal investment model,contrary to the target of value-maximum,so the the problem of investment efficiency has always been the focus of academic attention.Because the modern enterprise characteristics of separation of ownership and management rights of the two,caused by the information asymmetry,the shareholders cannot be implemented effective supervision on the managers,not shareholders agent will give priority to their own advantage in the choice of investment projects,rather than consider the interests of shareholders.When free cash flow sufficiently,for the motivation of establish the corporate empire,agents enlarge the scale of the company,control more resources,thereby obtaining more private benefits,it's can easily lead to over investment.With the emergence and development of managerial ownership,management ownership as an effective incentive mechanism has been widely accepted by listing Corporation in recent years.But in China the introduction of managerial ownership incentive mechanism policy later and the law is not perfect,to a certain extent restricted the effective development of managerial ownership incentive mechanism.Until 2006 with the completion of the share reform,the company law and the securities acts to eliminate legal barriers for the management of stock ownership incentive,managerial ownership to be used on a large scale,but until now,China is still exists the problem about the management stock ownership ratio is generally low.And there is a question that if managerial ownership can reduce agency costs,curb excessive investment.This article starts from the economic system and the macro environment of our country,based on the principal-agent theory,asymmetric information theory,incentive theory,free cash flow hypothesis as the theoretical basis,and from the perspective of corporate governance,to theoretical analysis the relationship of agency cost and over investment,managerial ownership and over investment,as well as the relieving effect of managerial ownership;then build the model after select the original data of 2010-2014 inChina two cities of Shenzhen and Shanghai A shares of listing Corporation as samples,through OLS regression,explore the managerial ownership,the effect of agency cost on over investment,and make a further investigation between three sub samplesAccording to whether there is management samples and property rights.Between them,the results show that:(1)over-investment is common in Chinese listing Corporation;(2)the higher agency cost of listed Company,over-investment more serious;(3)management stock ownership can restrain listed companies over-investment,when founding there is existed over-investment in the company;(4)managerial ownership can reduce the positive effect of agency costs on over-investment;(5)of managerial ownership incentive effect is more obvious in non-state enterprises.Finally,according to the results of this study,combined with managerial ownership incentive mechanism and over-investment phenomenon,put forward relevant policy recommendations to optimize the management stock ownership,to a certain extent provide a reference for listed companies to improve the incentive mechanism,promote the efficiency of corporate investment,optimize the allocation of resources of the enterprise.