Analyst Attention, Executive Compensation Stickiness And Enterprise Over-investment

The survival and development of an enterprise depend on the investment of the enterprise.The correct investment decision can increase the value of the enterprise.The non-efficiency investment is ubiquitous,which mainly stems from the principal-agent problem arising from the separation of the two powers.In order to alleviate the problems of principal-agent,various compensation mechanisms aiming to harmonize the interests of senior executives and shareholders,the optimal compensation contract has become the main mechanism.The optimal contract theory argues that executive compensation should be linked to performance appraisal,but the “rewards for lighter penalties” of senior executives,that is,the stickiness of executive compensation,has reduced the effectiveness of the compensation incentive system,but will aggravate agency problems.Therefore,the existence of pay stickiness will enhance the self-interest motives of senior executives,leading executives to seek private gain through excessive investment and harm the interests of the company and shareholders.How to effectively restrain self-interest motivation of senior executives has always been the focus of domestic and foreign scholars.Some academics believe that corporate internal and external governance can constrain the self-interest motives of senior executives.As an important player in the market,securities analysts have played a role in the enterprise.A certain degree of external governance.Therefore,this article focuses on the relationship between analyst attention,executive compensation stickiness,and company overinvestment.Through the combination of normative and empirical research methods,principal-agent theory,information asymmetry theory,optimal contract theory,and effective market hypothesis are the theoretical support,and the 2009-2016 China A-share listed company is the subject of research and discusses the relationship among analyst attention,executive compensation stickiness and over-investment of the company,while considering different nature of property,analyst attention influences the relationship between the stickiness of executive compensation and the over-investment of the firm.Through the study found that:(1)Executive compensation stickiness is positivly correlated with the company's excessive investment.The greater the stickiness of executive compensation,the greater the degree of overinvestment in the firm.Explain that the failure of salary incentives has caused certain economic consequences.(2)Analysts' concern can inhibit the positive impact of executive stickiness on corporate overinvestment.It shows that the degree of attention of analysts has a certain degree of supervision and restriction on the opportunism motives of the company's senior executives and can play a role in the external governance of the company.(3)Compared with non-state listed companies,the degree of attention of analysts in the state-owned listed companies has a more pronounced inhibitory effect on the positive correlation between executive stickiness and over-investment.Compared with non-state-owned enterprises,state-owned enterprises may need to strengthen their internal and external supervision and constraints,and continue to deepen reforms,strengthen corporate governance mechanisms,and continue to improve the modern enterprise system.The research of this paper has certain theoretical and practical significance,and can provide reference for the executive compensation incentive system and the external supervision system of the capital market.