Management Compensation and the Overinvestment——The Empirical Evidence from China's A-Share

This paper uses all china a-share non-financial listed companies in 2001～2009 as initial samples,to analyze empirically the relationship between corporate over-investment and managers' compensation by measuring managers' compensation from different angles.This paper finds the following conclusions: in China the companies' managers monetary compensation was significantly positively correlated with over-investment,indicating the manager's salary in China have exacerbated the company's over-investment because over-investment in such companies can increase management compensation,which showed a strong opportunistic behavior;overinvestment of company has no significant relationship with the company's executive compensation sensitivity and managers' equity incentive due to equity incentive system of listed companies introduced initially,and limitation of implementation of equity incentives,which remains to be established sound.