Board Heterogeneity And Inefficient Investment Of Enterprise

Enterprise is the product of principal-agent relationship.Its healthy development can not be separated from the escort of corporate governance.The board of directors is the core of corporate governance.It is an effective mechanism to solve the problem of inconsistencies between agents and principals.It plays an important role in the governance of modern companies.Under the modern enterprise system,the investment plan of the company is formulated by the managers,the board of directors makes decisions,and even many important investments are directly decided by the board of directors.The investment decisions are directly implemented by the managers and supervised by the board of directors.As an important decision-making body,the board of directors of listed companies is a bridge between shareholders and management,which can alleviate agency problems.The choice of investment direction and decision-making of investment plan have an important impact on the investment efficiency of the company.High-level echelon theory shows that team’s background characteristics will affect team’s thinking mode and decision-making behavior,while resource dependence theory shows that individual differences in team characteristics will enable the whole team to have more work experience,a broader vision and a more comprehensive knowledge structure system.However,most of the existing studies study the role of the board of directors from the external visible and easily accessible characteristic variables(such as the size of the board of directors,the proportion of independent directors,the number of meetings of the board of directors,etc.),and regard each board member as an indifferent individual,rather than one of the group members that interact with each other in the board of directors.Therefore,starting from the heterogeneity of the board of directors,this paper studies its impact on the inefficient investment of enterprises.It is pointed out that when building an efficient board decision-making team,we should consider the directors’individual abilities,pay more attention to the differences among the members of the board,and observe whether these differences can form complementary effects,so that the board team can play a more active and effective role in corporate governance,thereby reducing agency costs more effectively and restraining the inefficient investment of enterprises.Based on principal-agent theory,high-level echelon theory and resource dependence theory,this paper chooses Shanghai and Shenzhen A-share listed companies from 2012 to 2017 as the research object.Through normative research and empirical research methods,four heterogeneous indicators of board age,gender,education level and tenure are selected to study the relationship between board heterogeneity and inefficient investment(overinvestment,underinvestment).Conduct research.At the same time,it examines its mechanism,that is,agency cost plays a mediating role in the relationship between board heterogeneity and inefficient investment.This paper further distinguishes between state-owned enterprises and non-state-owned enterprises,and explores whether there are significant differences in the inhibiting effect of board heterogeneity on inefficient investment between the two types of enterprises.In order to achieve the purpose of this study,the following structure is discussed in this paper:The first part is introduction.This section first clarifies the background of this study,and further explains the purpose and significance of this study on the basis of clarifying the background of this study,puts forward the ideas and logical framework of this study,and describes the research methods and structural arrangements adopted in this paper.The second part is literature review.In this part,the author reviews the literature on the economic consequences of board heterogeneity and the influencing factors of investment efficiency,then combs the research results on board governance and inefficient investment,and finally evaluates and summarizes the research results at home and abroad.The third part,the theoretical basis and hypothesis.This part mainly describes the basic theory,including principal-agent theory,high-level echelon theory and resource dependence theory.It analyses the basis of the board heterogeneity affecting the inefficient investment of enterprises.On this basis,it introduces the agency cost of intermediary variable,and studies whether the board heterogeneity affects the inefficient investment of enterprises by influencing agency cost.Finally,it combines the following theories:The hypothesis of this paper is put forward through theoretical analysis.The fourth part is empirical research design.This section first clarifies the data sources and sample selection of this paper,then explains the meaning and measurement methods of the explanatory variables,explanatory variables and control variables involved in this paper,and constructs the empirical model needed in this paper.The fifth part,empirical results and analysis.Based on descriptive statistics and correlation analysis,this part carries out multiple regression analysis on board heterogeneity and inefficient investment,and on the basis of the results of multiple regression,adds intermediary variable agency cost to study whether board heterogeneity affects inefficient investment by influencing agency cost.Next,in order to test the accuracy of the regression analysis conclusion,this paper carries out robustness test to confirm the reliability of the conclusion,and further distinguishes the nature of property rights grouped regression,to study the impact of board heterogeneity on inefficient investment in companies with different property rights.The sixth part,research conclusions and prospects.According to the empirical results of the fifth part,the main research conclusions are drawn,and then according to the conclusions,the policy recommendations to strengthen the construction of the board of directors are put forward.Finally,the limitations of this study are pointed out,and the future research directions are prospected.It is found that the age,education level and tenure heterogeneity of the board of directors significantly inhibit the inefficient investment of enterprises,but the gender heterogeneity of the board of directors does not significantly inhibit the inefficient investment of enterprises.Furthermore,this paper considers the differences in property rights of enterprises,and finds that compared with non-state-owned enterprises,the inhibiting effect of board heterogeneity on inefficient investment in state-owned enterprises is more difficult to achieve.The main reason is that the board of directors of state-owned enterprises will consider the government’s wishes and social needs more in decision-making than in non-state-owned enterprises.Purely pursue the maximization of enterprise value.The conclusion of this paper can not only enrich the research on the heterogeneity of board of directors and inefficient investment of enterprises,but also provide new cognition and suggestions on how to strengthen the team building of board of directors to improve the efficiency of their own investment in practice.This research breaks through the limitation of previous research that every board member is regarded as indifferent individuals.It is innovative to study the impact of heterogeneity on the eficiency of corporate investment from a new perspective.In addition,the heterogeneity of this paper only selected some demographic characteristics,failing to take into account some inherent characteristics that are difficult to quantify.If we can examine some novel objective characteristics of heterogeneity in the follow-up study,the significance of this study will be more far-reaching.