Dual-class Share Structure, Executive Compensation Incentives And Inefficient Investmen

Since 2018,capital market of China has introduced a dual-class share structure system successively,allowing enterprises to list in a dual-class share structure,providing diversified financing options for Chinese enterprises.Investment,as the internal thrust of the long-term development of China’s micro-enterprises and the important support of macroeconomic growth,often faces many inefficient investment behaviors in reality,which not only hinders the sustainable development of enterprises,but also causes the waste of social resources and thus affects the national economy.Compared with the traditional "one share and one right" structure,the unequal control and income rights of executives with dual ownership structure is an important innovation in corporate governance,but it is also easy to trigger rent-seeking motivation.So,does the dual-class share structure aggravate the inefficient investment of enterprises? And has executive compensation incentive played an effective role in the process of the impact of dual ownership structure on investment efficiency?Based on this,this paper takes Chinese companies listed in the United States from 2005 to 2021 as the research sample to explore the internal relationship between the dual-class share structure,executive compensation incentive,and inefficient investment level.The empirical results show that:(1)There is a positive correlation between the dual ownership structure and the level of inefficient investment of enterprises,that is,the dual-class share structure will cause more inefficient investment behavior,and the main performance is over-investment;(2)The regulatory effect test found that in the companies with dual-class share structure,the monetary compensation incentive for executives significantly alleviated the level of inefficient investment of enterprises,and was equally effective in over-investment;(3)The regulatory effect test found that in the companies with dual-class share structure,equity incentives have a weak inhibitory effect on the level of inefficient investment of enterprises,and the inhibitory effect on over-investment is also weak.In order to test whether the mechanism of dual ownership structure affecting investment efficiency will be affected by agency cost and external financing dependence,this paper further analyzes and finds that:(1)compared with the low agency cost group,the dual-class share structure has a stronger impact on inefficient investment level in the high agency cost group;(2)Compared with the group with low external financing dependence,the dual-class share structure has a stronger impact on the level of inefficient investment in the group with high financing dependence.This paper,taking the opportunity of gradually releasing the restrictions on the listing of enterprises with dual-class share structure in China,focuses on analyzing the impact of dual-class share structure on investment efficiency,and puts forward relevant suggestions based on China’s national conditions.It has expanded the research of the dual-class share structure from the micro to the macro level,and provided the logical basis and policy suggestions for the equity system to land in the A-share market.