Executive Tenure?Executive Incentive And Investment Efficiency

The investment activity is the capital market to pull the economic growth core power and the main source of value creation for enterprises.Whether the investment activity is effective or not directly relates to the level of the company's capital investment efficiency,which not only relates to the degree of resource allocation,but also directly determines the company's own business development.In financial management,the initial procedure of a series of business decisions made by an enterprise is usually the decision of the company's investment activity,and the decision is greatly influenced by the senior executives.However,in the modern corporate enterprises with separation of ownership and management rights,in the presence of agency problems and information asymmetry,executives are not completely rational,and may consider their own interests more than the interests of the company when choosing and implementing investment decisions.As a result,the low efficiency of enterprises' various investments will occur,which will inevitably affect the value creation of micro enterprises,and even lead to the overcapacity and structural imbalance of macro economy.Executive tenure,as one of the background characteristics of senior executives,reflects an important aspect of agency conflicts,which should be paid enough attention to.Through reviewing a large number of literatures,it is found that there are relatively few researches on executive tenure and investment efficiency in China at present,which basically focus on the actual tenure of senior executives and ignore the characteristic variable of expected tenure of senior executives.The expected tenure of senior executives represents the prediction of their future tenure,and the implementation of the policy of "progressive delay of retirement age" is included in the important tasks put forward at the Third Plenary Session of the 18 th Central Committee of the Communist Party of China and the Fifth Plenary Session of the 18 th Central Committee of the Communist Party of China.Yin Weimin,Minister of Human Resources and Social Security,said that efforts should be made to complete the formulation of "progressive delay of retirement age",which was launched in 2017,at least five years after it was launched,and then will be gradually implemented.The implementation of the policy of " progressive delay of retirement age" is bound to have an impact on both the actual tenure and the expected tenure of senior managers,and both the actual tenure and the expected tenure of senior executives may have a significant impact on the investment efficiency of the company's capital.In addition,different incentive methods for senior executives will have different degrees of influence on their investment preferences,risk tolerance,confidence state,behavior choice,work enthusiasm and other psychological characteristics.The owner's shareholders of a company can guide and regulate the behavior of senior executives by implementing incentive mechanism.It can be seen that the important role of incentive mechanism cannot be ignored when discussing the internal relationship between the actual tenure and expected tenure of senior executives on the capital investment efficiency of the company.Therefore,based on principal-agent theory,upper-echelons theory,incentive theory,tournament theory as the theoretical basis,this paper selects 1465 listed companies in Shanghai and Shenzhen A-shares from 2013 to 2017 as research samples,filtering,sorting,calculating the related data,then multiple linear regression equation was established to the empirical analysis,mainly studies the actual tenure and the expected tenure impact on the efficiency of the enterprise investment mechanism,at the same time joined the adjustment variables of executive incentives,starting from the two dimensions of explicit incentive and implicit incentive,this paper respectively explores how explicit incentive(equity incentive)and implicit incentive(promotion incentive)affect both actual tenure and investment efficiency,as well as the relationship between expected tenure and investment efficiency.The results of empirical analysis show that both the actual tenure of senior executives and the expected tenure of senior executives have a significant positive correlation with the investment efficiency of the company,that is to say,with the continuous extension of the actual tenure of senior executives,the more they can inhibit the occurrence of the company's inefficiency investment behavior,and the higher the investment efficiency of the company is.The longer the expected tenure of senior executives is,the more they can restrain the impulse of inefficient investment and improve the investment efficiency of the company.At the same time,we also found that different executive incentives have different regulatory effects,equity incentive positively regulate the impact of executive actual tenure on corporate capital investment efficiency,and promotion incentive negatively regulate the impact of executive expected tenure on corporate investment efficiency.However,equity incentive has no significant moderating effect on the expected tenure and investment efficiency of executives,and promotion incentive has no significant moderating effect on the actual tenure and investment efficiency of executives.Finally,according to the research conclusions of this paper,the following countermeasures and Suggestions are put forward:(1)improve the selection system of corporate executives,appropriately extend the tenure of senior executives;(2)improve the investment decision-making mechanism and strengthen the internal supervision mechanism of enterprises;(3)reasonably and pertinently arrange the internal incentive mechanism according to the characteristics of senior executives' tenure.The study of this paper is expected to provide certain reference and value for the implementation of the policy of " progressive delay of retirement age ",the appointment and employment system of senior executives and how to improve the investment efficiency of enterprises more effectively.