Corporate Governance Mechanism,Long Term Investment Policy And Firm Performance

From 2015 to 2018,the Central Economic Working Conference has successively proposed to cut overcapacity,deepen the supply-side structural reforms and promote high-quality development.These measures are closely related to the long-term investment of enterprises.The scale of long-term investment determines the production capacity,the structure of long-time investment determines the supple-side structure and the efficiency of long-term investment determines the quality of economic development.Corporate governance mechanism has an important impact on long-term investment policy.It is composed of internal governance mechanism and external governance mechanism.Internal governance mechanism covers the ownership,ownership concentration,equity restriction,executive compensation incentives and executive equity incentives;while external governance mechanism includes product-market competition and capital market competition.Long-term investment policies are divided into long-term investment scale,long-term investment structure and long-term investment turnover.How does corporate governance mechanism affect long-term investment policies?What impact does long-term investment policies have on corporate performance?In this paper,manufacturing,wholesale and retail sales,electricity,heating power,fuel gas and water production and supply industry in Shanghai and Shenzhen markets from 2007 to 2015 are taken as the research samples,and the theoretical analysis and empirical test are carried out.The results of all sample regression analysis on the influencing factors of long-term investment policy show that(1)the equity restriction and the growth rate of non-current assets are significantly inversely "U" type;executive equity incentive,main business income growth rate and company size have significant positive effects on the growth rate of non-current assets;market share has a significant negative impact on the growth rate of non-current assets.(2)The equity restriction and innovative investment ratio was inverted "U" type relationship;executive compensation incentives,equity incentive,the growth rate of main business income and company size has a significant positive effect on the innovation of the investment ratio;market share,market position of innovative investment has a significant negative impact than cases.(3)The equity restriction and the proportion of productive investment are inversely "U" type;equity incentive,main business income growth rate and company size have significant positive effects on the proportion of productive investment;market share,market position has a significant negative impact on the proportion of productive investment.(4)The equity incentive,the growth rate of the main business income and the company size have significant positive influence on the equity investment ratio,and the market position has the significant negative influence on the equity investment proportion.(5)The equity restriction has a significant "U" relationship with innovative investment turnover rate;equity incentive has a significant negative impact on the turnover rate of innovative investment,and market share and market position have a significant positive impact on innovative investment turnover rate.(6)The relationship between ownership concentration and productive investment turnover is significant;there is a significant"U" relationship between equity balance and productive investment turnover;salary incentive,main business income growth rate,market share and market position have significant positive effects on the turnover rate of productive investment;the size of the company has a significant negative impact on the turnover of productive investment.(7)Ownership concentration and equity investment turnover significantly inverted "U" relationship;equity restriction and equity investment turnover showed a unilateral inverted "U" curve relationship;the growth rate of main business income,market share and market status has significant positive impact on equity investment turnover;compensation incentive has a significant negative impact on the equity investment turnover rate.The results of all sample regression analysis on the effect of long-term investment policy on enterprise performance show that:innovative investment proportion,productive investment proportion,equity investment proportion,productive investment turnover rate and equity investment turnover rate have a significant positive impact on enterprise performance;the growth rate of non-current assets has a significant negative impact on corporate performance.Further industry regression analysis shows that the impact of long-term investment policy on firm performance varies with industry.In competitive industries,all of the above effects exist;in monopolistic competitive industries,none of the above effects exist;in monopolistic industries,the effects of innovative investment ratio,equity investment ratio and productive investment turnover rate exist,but the influence of other variables does not exist.The further regression analysis shows that in non-state-owned enterprises,the growth rate of non-current assets and the turnover rate of innovative investment have a significant negative impact on the performance of enterprises,but this impact does not exist in state-owned enterprises;equity investment turnover has a significant positive impact on corporate performance,but it does not exist in state-owned enterprises.The above study found that it provides a lot of reference for improving the long-term investment policy of enterprises.First,"to cut overcapacity" can help to improve the performance of the enterprise,which is different from the industry.Not only state-owned enterprises have to go to capacity,but also non-state-owned enterprises have to go to capacity.Second,technological innovation is an important way to improve the performance of enterprises and promote the development of high quality.Moderate equity restriction,executive compensation incentive,executive equity incentive,and rapid growth of enterprises all help to improve the proportion of innovative investment.Third,the improvement of corporate governance and the establishment of an appropriate equity restriction mechanism will help to optimize the long-term investment policy.Market competition helps to improve the long-term investment structure and improve the efficiency of long-term investment.