Research On The Relationship Among Executive Power,Institutional Investors And Corporate Overinvestment

Enterprises are the main body of China's national economic development and are in an important position in China's economic development.In the enterprise,due to the existence of the principal-agent relationship,the interests of the executives and the enterprises are inconsistent.When the information is asymmetric with other shareholders,directors and investors,the executives are likely to make investment decisions from the perspective of their own interests.In China's state-owned enterprises,the power of executives is highly concentrated,and some enterprises may even have a "one-word" situation,and the phenomenon that the majority shareholder of private enterprises is the general manager also makes the executives have superior control over the company,which provides convenient conditions for the use of power to seek rent.For the purpose of building a “manager empire”,increasing their own salary,stabilizing their position,and having short-sighted behaviors,corporate executives will over-invest in corporate funds when they have more power,which will lead to over-investment.As an external investor of the enterprise,institutional investors have benefited from the completion of the share-trading reform and the support of national policies.In recent years,they have been growing continuously,and the types of shares and shareholdings have been increasing,They have become important participants in China's securities market.Institutional investors have taken advantage of their large capital,strong information processing and high-end talents,and have gained more and more voice in corporate governance,which has gradually played an important role.Whether this can be controlled by institutional investors to restrict corporate executive power and thus inhibit the company's excessive investment behavior,this paper mainly analyzes and discusses this issue.This paper selects the non-balanced panel data of China's A-share listed companies in Shanghai and Shenzhen from 2013 to 2017 as the research sample,empirically studies the relationship between executive power and corporate over-investment,and further analyzes the role of institutional investors in regulating the relationship between executive power and over-investment.The analysis found that the relationship between executive power and overinvestment was in the same direction;institutional investors as a whole do not have an inhibitory effect on excessive investment caused by executive power,but from the perspective of institutional investors' heterogeneity.It has been found that stable institutional investors can play a role in restraining the relationship between executive power and over-investment in the enterprise compared to trading institutional investors.Finally,based on the empirical conclusions and combining with the actual development of Chinese enterprises,this paper puts forward relevant suggestions from the aspects of preventing the excessive expansion of executive abnormal power,exerting the governance role of institutional investors and improving the excessive investment of enterprises.