Incentives and Investment Efficiency: The Evidence From Listed Family Firms

Abstract

In the process of the economy in China, listed family firms have a large proportion of all the listed companies, which plays an important role in China. By selecting the statistics in the recent five years from CSMR and Wind, OLS model is used to investigate the efficiency investment. After distincting the groups of overinvestment and underinvestment, we present the figures for stock and payment incentive and exam regression with residuals respectively, as well as exploring the relationship between incentive and efficient investment. The results indicate that the level of payment and stock incentive has a negative impact on the inefficiency investment. Therefore, if family firms carry out the incentive, it could be helpful to alleviate the inefficiency, grasp a good chance, relieve information asymmetry and reduce the agency issues. The results recommend that listed family firms could implement stock and payment incentive plans, like other listed companies to motivate the managers.