The Influence Of Managerial Power On Over-investment In The View Of Market Competition

The reform of state-owned enterprises since China's reform and opening up makes the management of state-owned enterprises have greater autonomy in management,in the meantime,the phenomenon that the big shareholder takes up the post of the manager in the private enterprises makes the management have the strong control of the company.This provides convenience for management rent-seeking.As the core content of production and operation activities of the enterprises,efficient investment can promote the growth of enterprise value and the development of national economy.However,in recent years,the phenomenon that the investment scale is continuous growing and the average annual growth rate of fixed assets is significantly higher than the average annual growth rate of GDP reveals that inefficient investment problems cannot be ignored.The management often master the company's resource allocation,and the expansion of enterprise scale can increase their payment and improve job security,consequently,management who have greater power will intervene the enterprises to conduct over-investment.At the same time,China has also been carrying out market-oriented reforms,which advocates for the market to be the subject of resource allocation.More and more scholars have also found out that market competition can play a certain role of governance and make up for the shortage of internal governance mechanism.However,there is little literature researching whether market competition can inhibit over-investment resulting from managerial power.Therefore,this paper starts from the perspective of market competition to research its influence on the relationship between managerial and over-investment.In addition,it fully integrates with our country's unique property rights system background.By studying the performance of market competition governance effect in different property enterprises,it will be conducive to better supervision and restriction management abuses of power.This paper includes the following five parts:The first part is introduction.As the beginning of the paper,this part mainly introduces the background of the topic and the research meaning of the paper.And it reviews and summarizes the domestic and foreign relevant research situation about the influence factors of over-investment,the economic consequence of managerial power,the relationship between managerial power and over-investment,as well as the governance effect of market competition.Then it introduces the research purpose and method,research framework and innovation point.The second part is the theoretical basis and research hypothesis.It carries on theory analysis on the basis of concepts and theories,then comes up with research hypothesis.The third part is research design.It introduces the selection of the sample,the definition of the variables,and the design of empirical models.The fourth part is the empirical results and analysis.It comprehensively uses descriptive statistical analysis,correlation analysis and regression analysis to examine the hypothesis.Furthermore,it uses robustness test to insure that the conclusion of this paper is reliable.The fifth part is the research conclusions and suggestions.It summarizes the research conclusion according to the empirical results,and put forwards relevant suggestions.Finally,it illustrates the shortage of this paper and the development direction of the future research.The result of this study shows that with the increase of managerial power,management is more motivated to seek private gain through over-investment.Market competition can play a governance role in this.On the one hand,market competition can create competitive pressure on enterprises,forcing management to choose investment projects more carefully to deal with threats from competitors.On the other hand,market competition can effectively promote the information transparency to facilitate outside investors to supervise management,so it can constrain over-investment resulting from managerial power.Further,budget constraints make state-owned enterprises face lower business risk,and the existence of policy burdens obscures the relevance of management behavior to the performance of the company.These play down the governance effect of market competition.Therefore,compared with state-owned enterprises,the market competition has more inhibition to the rent-seeking behavior of non-state-owned enterprises.The innovation of this paper is that it combines market competition when studying on the relationship between managerial power and over-investment,and it provides a new perspective to restrain the management rent-seeking behavior of Chinese public companies.Furthermore,this paper selects indicators from different aspects to reflect managerial power,so it is conducive to understanding the cause of managerial power and restraining managerial power by consummating the corporate governance mechanism.This paper also takes into account the unique background of property system in our country,by studying the performance of market competition governance effect in different property enterprises,it will be conducive to better supervision and restriction management abuses of power.