The Characteristics Of Independent Directors And Overinvestment Of Enterprises

At present,in China’s economic market,enterprises are an indispensable subject.For an enterprise,the efficiency of investment reflects whether the investment decisions made by the enterprise are correct and whether they can bring value to the enterprise.At present,enterprises in the market generally have the characteristics of "separation of two rights".That is,separation of ownership and management rights of enterprises.How to effectively establish a supervisory mechanism within enterprises and effectively supervise the decision-making of the actual operators’ behavior will become the focus of enterprise reform in China.Since the China Securities Regulatory Commission issued the Guiding Opinions on the Establishment of Independent Director System in Listed Companies on August 21,2001,the independent director system has gradually been established in Chinese enterprises,and the internal governance of enterprises has been alleviated to a certain extent.However,there are still different opinions in the academic circles as to whether the independent director system is inevitably effective.In order to prove the effectiveness of the independent director system and the impact of its different characteristics on the internal governance mechanism of enterprises,this paper takes all A-share non-financial listed enterprises in China as the research object,starting from the overinvestment behavior of enterprises,to study whether there is a certain correlation between the characteristics of independent directors and the overinvestment behavior of enterprises.In the early stage of writing,the author consulted the important literatures about overinvestment and independent directors at home and abroad,sorted out and analyzed the current research status of the two in academia,clarified the functions of independent directors,summarized the causes of overinvestment in enterprises,studied the mechanism of the role of independent directors in overinvestment in enterprises,and put forward relevant theories.On the basis of these assumptions,this paper constructs an empirical analysis model.In addition,in the empirical stage,this paper mainly introduces the data sources and the necessary data processing,according to the proposed model of empirical regression,to illustrate the relationship between the characteristics of independent directors and overinvestment behavior of enterprises.The last part of this paper is a summary of the empirical research results,and according to the research results,it puts forward some policy recommendations for the development of internal governance mechanism and independent director system in China.This paper finds that:(1)The average academic qualifications of independent directors employed by enterprises are negatively correlated with the overinvestment behavior of enterprises,and this conclusion is still valid in enterprises with high equity concentration and private enterprises.The higher the average education level of independent directors is,the more professional they will be when they play supervisory and advisory functions within the enterprise.The more education they receive,the more rational investment decisions they will be able to assist the actual managers of the enterprise to make,and thus to some extent,alleviate the problem of low investment efficiency.(2)The average age of independent directors employed by enterprises is negatively correlated with overinvestment,just as the average academic credentials of independent directors.(3)There is also a significant negative correlation between the number of independent directors and overinvestment,which also shows that as an independent third-party personnel,independent directors play a full role in the internal governance mechanism of enterprises.(4)As for the proportion of female independent directors among independent directors,there are some differences among the samples.This may be due to the fact that the proportion of female independent directors is still relatively small,the voice of female independent directors is not strong,and the impact of female independent directors on corporate Over-investment Behavior is not obvious enough.From the perspective of overinvestment,this paper affirms the necessity and effectiveness of the existence of independent directors in enterprises to a certain extent,and provides relevant practical evidence and policy suggestions for the study of independent directors in enterprises and the improvement and development of internal governance mechanism in China.Secondly,it provides the latest evidence for the analysis and research of enterprises’ over-investment behavior,which has some enlightenment significance for alleviating enterprises’ Over-investment Behavior and improving enterprises’ investment efficiency.