Ultimate Control Rights,Equity Incentive And Inefficient Investment

As the main force of economic development,private enterprises have made important contributions to increase employment,activate market economy and improve industrial structure,but also have the problem of inefficient investment.Investment efficiency is related to the future growth of enterprises,so the research on restraining inefficient investment is of great significance.The defect of corporate governance is the important reason of inefficiency investment.The principal-agent contradiction between owner and operator is the focus of traditional corporate governance research,and equity incentive is considered to be an effective measure to solve this kind of problem.However,there is no consistent conclusion on the effect of equity incentive in China.In order to solve the principal-agent problem,we should not only consider the incentive measures to the operators,but also implement the effective supervision measures.Most of the private listed companies have evolved from the family enterprises.Pyramid equity institutions and cross-shareholding are generally used to control the management and decision-making of the companies.The governance behavior of the ultimate controlling shareholders have the essential influence.The ultimate controlling shareholders and minority shareholders can not only share interests,but also have conflicts of interest.On the one hand,the ultimate controller can supervise the management,which is beneficial to the effect of equity incentive.The paper study the influence of the two actions on the inefficient investment.On this basis,this article to a 2013-2017 data of Chinese private listed firms from Shanghai and shenzhen two city a shares as samples to test the impact of equity incentives on inefficient investment,and introduces the ultimate control right as a variable to regulate the two.And then explore the relationship between the three.Among them,the ultimate right of control is mainly developed from the two dimensions of control motivation and ability.The results show that the non-efficient investment behavior exists in the private listed companies in China,and the underinvestment is more common.In the absence of shareholder control,the efficientimplementation of equity incentives not only effectively improves Underinvestment,but also aggravates over-investment.Considering the shareholders undefined right of control,under the supervisory control environment with two rights matching,the stock right incentive can restrain the insufficient investment,but due to the limited supervision function,the stock right incentive will still aggravate the over-investment;Under the intrusive control environment of the separation of power,equity incentive can restrain the underinvestment,and because of the balance between ultimate controller and management,the implementation of equity incentive will not aggravate the over-investment.The influence of control right on the implementation of equity incentive is different with different proportion of shareholding: when the control right is small,the control power is limited and there is no significant influence on the effect of equity incentive implementation;With the increase of the control right to the relative controlling position,there is obvious encroachment effect,and the equity incentive does not play the proper incentive effect.When the control right increases to the absolute controlling position,it shows synergistic effect.Actively supervising the senior management level,the equity incentive can effectively improve the under-investment without aggravating the over-investment.Finally,according to the conclusion of theoretical and empirical research,this paper puts forward some suggestions on how to improve the internal governance level and restrain the inefficient investment behavior of private listed companies.