Can Non-Executive Equity Incentives Affect The Efficiency Of Corporate Investment?

In recent years,the number of companies implementing equity incentives in China has been growing,and the number of companies issuing equity incentive proposals increased to 818 in 2021.As an effective way to coordinate the conflict between shareholders and managers,companies hope to solve the principal-agent problem caused by the separation of ownership and operation of modern enterprises through equity incentive mechanism.On the other hand,investment decision is one of the important elements in the company’s management,which has an important impact on the production and operation,profit level,etc.The principal-agent problem leads to the concealment of important information by corporate executives and employees with the goal of maximizing their personal interests,which eventually causes the interests of corporate shareholders to be damaged.Therefore,how enterprises can better understand and make full use of equity incentive policies is a research area worthy of attention at present.When exploring the equity incentive system,domestic and foreign scholars mainly analyze the impact of equity incentive on the business performance,internal control,risk control and information disclosure of enterprises.In terms of investment efficiency,most of them are from the perspectives of corporate governance,market interest rate,free cash flow,etc.The current research on the relationship between equity incentives and investment efficiency is more explored at the executive level,exploring the impact of executive shareholding or executive equity incentives on corporate investment efficiency,and there is still more room to explore the research on investment efficiency through the perspective of equity incentives.So,does the implementation of non-executive equity incentives in domestic listed companies have any effect on the investment efficiency of enterprises? Is it influenced by other factors? Is there a reasonable influence path for it?This paper takes the listed companies that announced their equity incentive programs between 2007 and 2020 as the sample,and analyzes the current status of the research on equity incentive and corporate investment efficiency,and empirically tests the influence of non-executive equity incentive on investment efficiency.This paper also examines the moderating effect test and the mediating effect test to verify the significant changes of the impact of non-executive equity incentives on corporate investment efficiency under different state-owned equity nature and environmental uncertainty,and also finds that the variable of information disclosure quality plays a mediating role in the process of nonexecutive equity incentives affecting investment efficiency.This paper mainly draws the following conclusions: First,the overall negative correlation between non-executive equity incentives and the overall investment efficiency of enterprises,and enterprises that implement non-executive equity incentives are more likely to have inefficient investment behaviors,especially excessive investment behaviors.Second,the nature of state-owned equity and environmental uncertainty play a regulatory role in regulating the relationship between non-executive equity incentives and investment efficiency.Third,the quality of information disclosure plays a role in the process of non-executive equity incentives affecting investment efficiency,and the implementation of non-executive equity incentives will lead to poor quality of corporate information disclosure,which in turn will affect the investment efficiency of enterprises.The main contributions of this paper are:(1)This paper focuses on the impact of incentive behavior on non-executives of firms,and by exploring the path of the role of non-executive equity incentives in investment efficiency of firms,the correlation factors between the two can be derived.(2)This paper investigates the specific impact of nonexecutive equity incentives on corporate investment efficiency by classifying corporate non-efficiency investment behavior into two aspects.(3)This paper tries to analyze whether there are other influencing factors and whether there is a mediating effect between the two while exploring the influence of non-executive equity incentives on corporate investment efficiency,so as to make the research results more comprehensive.