Managerial Power,Analyst Coverage And Inefficient Investment

At present,China’s economy is still booming,and the fixed asset investment of the whole society is growing steadily.In order to continue the good momentum of the Chinese economy,the joint role of the supply side and the demand side is indispensable,and resource allocation efficiency is particularly important at this time.Investment activities,as an important part of business operations,are of great significance to the sustainable development of enterprises and the economic operation of the entire society.However,due to the continuous change and development of the management rights has been formed today.The owner invests in the establishment of the company,and the company’s operating rights and decision-making power are transferred to the operator.In the absence of good supervision and control measures,the operator will put personal interests above the interests of the owners,Therefore,when making investment decisions,there will be random and irrational investment,which leads to inefficient investment.As part of the capital market,analysts have also developed towards the goal of standardization and maturity in recent years.Analyst coverage has gradually become an important force in the company’s external supervision.Analyst coverage exerts external governance effects through information brokering functions and external oversight functions.Not only does it directly supervise management,but it also enables other stakeholders to understand internal information through specialized information mining and In this way,the management is urged to take the interests of shareholders first in making decisions.This paper examines managerial power,analyst coverage and inefficient investment into a unified framework to explore the reasons why managerial power triggers inefficient investments and whether analyst coverage can use external oversight to reduce inefficient investments.This paper first introduces the background of management power,analyst coverage and non-efficiency investment,and then summarizes the relevant research literature,combined with principal-agent theory,information asymmetry theory,overconfidence theory,management power theory and The effective market theory elaborates on the logical relationship between them,and makes assumptions based on this.Then,the data from 2007 to 2017 of Shanghai and Shenzhen A-share listed companies are selected as samples,and a total of 12682 samples are obtained after a series of screenings.After the corresponding empirical regression and analysis,this paper draws the following conclusions:(1)China’s listed companies still have problems with deviation from the optimal level of investment,in which the proportion of under-investment is large;(2)Other conditions are certain,management power over the meeting to trigger non-efficiency investment behavior,including over-investment and under-investment;(3)Analyst coverage can reducing inefficient investment behavior caused by excessive management power;(4)Analyst coverage can also regulate over-investment and under-investment caused by excessive managerial power.Based on the empirical results and corresponding analysis,this paper proposes four suggestions to reduce the level of inefficiency investment of enterprises and promote corporate investment towards an optimal level.(1)Enterprises should strengthen the restrictions on management by improving the ownership structure,clarifying the role of the board of directors and the board of supervisors.;(2)the enterprise shall improve the incentive mechanism for management,including material incentives and spiritual incentives,and improve the enthusiasm of the management;(3)Enterprises should establish a good internal control system to balance managerial power.(4)The regulatory authority should be called upon to correctly guide the analyst profession and make the analyst profession develop well,in order to better play the governance role of analysts.