The Mitigating Effect Of Non-executive Directors On Non-efficiency Investment

Investment is the social economic activity and one of the main activities of enterprise capital movements.On the one hand,investment activities affect the economic growth and overall resources circulation.On the other hand,investment activities affect the enterprise’s cash flow,and even some major investment decisions will affect the long-term development of the enterprise.In recent years,the amount of investment in China and its share of GDP have been at a high level.In terms of total social fixed asset investment,its share of GDP has climbed year by year,up from 64.34%in 2011 to 83.05%in 2015.Thus,the importance of investment can be seen.With limited capital market in China,however,the validity of the agency problem and asymmetric information problems are also increasingly prominent,which makes enterprise investment efficiency can’t be effectively identified.The poor efficiency of investment not only hinders the enterprise financing activities and operating activities,also hinders the development of market economy.As a result,many scholars have focused on what impacts investment efficiency and how to mitigate non-efficiency investment problems.From the outside of the company,there are scholars who study from investor protection,product market competition and information disclosure.From the internal level,also some scholars from managers personal characteristics,independent directors and equity structure Angle to study the causes and countermeasures of the efficiency of investment.The board is an integral part of the corporate governance mechanism.The director of the company can be divided into internal directors and external directors.The external directors can be divided into independent directors and non-executive directors.Since introduced the independent director system,much attention has been paid to the role of independent directors,but also some scholars in recent years has pointed out that the governance role of independent directors in our country is not as effective as in the west.In contrast,the non-executive directors of the appointment system may be more independent and more likely to play an oversight role in corporate governance.So when there is a problem of agency and information asymmetry,can non-executive directors mitigate the problem of non-efficient investment?Does the balance of equity and the financial background of non-executive directors have an impact on this effect?This article consists of six parts.The first part is the introduction.This section mainly introduces the background,research significance,the research goals and the research content.The second part is literature review.This part combined three aspects of literature at home and abroad,namely non-executive directors,the efficiency of investment,and the efficiency of board governance.Third part is theoretical analysis and analysis.This part mainly elaborates the basic theory and basic concepts of this article,and excavates the principal-agent theory,asymmetric information theory and the theory of human resources and the relationship between investment efficiency.The fourth part introduces the key variables of measuring methods and the corresponding model.Lastly,this part also introduces studies samples ready for empirical testing.The fifth part is the empirical analysis.This part tests the efficiency of investment and the relationship between the non-executive director,and through the robustness test to verify the conclusion of this article.The sixth part is research conclusion and the countermeasure proposal.Based on the above empirical research,this paper puts forward some suggestions to the listed companies.Aiming at the problem of inefficient investment of listed companies,this paper puts forward the following suggestions:first,build the system of non-executive directors,and increase the number of non-executive directors in order to improve the internal governance mechanism;second,adjust the structure of the shareholding structure and maintain a reasonable balance of equity;thirdly,give full play to the value of human capital and improve the efficiency of investment;fourth,improve the capital market and the efficiency of capital allocation.