The Nature of Controlling Shareholders, Executive Compensation and Investment Efficiency: Data from Chinese Capital Markets

Abstract

Inefficient investment is a common phenomenon in Chinese listed companies. And the non-efficient investment behavior of non-state-owned listed companies is more than that of state-owned listed companies. Also the inefficient investment of locally controlled listed companies is more serious than that of centrally controlled listed companies. Executive monetary compensation has a significant inhibitory effect on over-investment and under-investment in listed companies. The author finds that State-owned listed companies have greater inhibitory effects than non-state-owned listed companies and the centrally controlled listed company has a greater inhibitory effect than the locally controlled listed listed company. Centrally controlled listed companies have a greater inhibitory effect on over-investment than in under-investment behavior. Equity compensation is negatively correlated with over-investment and under-investment, but the test results are not significant.