Executive Compensation Incentives?Internal And External Supervision And Overinvestment

Investment activities are indispensable economic activities in the daily production and operation process of enterprises.High-efficiency investment will bring high profits and high returns to enterprises.Inefficient investment will damage the interests of enterprises and reduce the efficiency of capital allocation.Bring losses to shareholders.In actual life,due to the existence of principal-agent problems,the separation of the two powers,information asymmetry,etc.,the management of the company may pursue personal interests(such as high returns from higher-risk returns,more compensation,longer).Vacations and bonuses)deviate from the goal of maximizing shareholders' equity,which causes shareholder capital waste and corporate value to be impaired,resulting in a decline in corporate performance.In order to minimize the problem of principal-agent and improve investment efficiency,people propose a high-level incentive mechanism.By optimizing the reward and punishment model,the management and shareholders' goals are converge,the manager's self-interest motivation is weakened,and the management's billion-dollar value is maximized.The benefits obtained are higher than the gains from self-interested behavior.Internal and external supervision mechanisms can supervise management's decision-making,reduce management's self-interested behavior,improve investment efficiency,and regulate the relationship between executive compensation and over-investment.This paper takes China's Shanghai and Shenzhen A-share listed companies as the research object,selects the data from 2012 to 2017 as the research sample,firstly finds the domestic and foreign related literatures of executive compensation,internal and external supervision and over-investment,and then refers to the corporate governance theory.,principal-agent theory,executive incentive mechanism,information asymmetry theory,incomplete contract theory and other related theories,put forward hypotheses about the possible relationship between executive compensation,internal and external supervision and over-investment,and construct relevant models for empirical analysis..The empirical results show that executive compensation incentives inhibit excessive investment,while internal and external supervision mechanisms(It is divided into three aspects: internal control quality,institutional shareholding ratio and external audit quality.)as adjustment variables strengthen executive compensation for over-investment.Inhibition.The research conclusions of this paper enrich the research content of investment efficiency in the existing literature,and have certain constructive significance for enterprises to optimize management incentive system,improve internal and external supervision mechanism,and improve investment efficiency.