Journal of Chemical and Pharmaceutical Research (ISSN : 0975-7384)

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Original Articles: 2014 Vol: 6 Issue: 8

The effect of stock equity on enterprise budget laxity behavior

Abstract

Budget plays a significant role in enterprise management; However, many theoretical and practical evidences reveal that the budget laxity phenomenon is widespread in organizations. The paper chooses the budget data of listed companies in Shenzhen A-share main board from 2007 to 2013 to explore the effect of equity factors on budget laxity based on the agency theory. The study shows that compared with private or foreign-invested enterprises, state-owned or state-controlled enterprises have more budget laxity. In terms of general situation and state-owned enterprises, the more ownership concentration exists, the more budget laxity phenomenon shows, while it is opposite to private enterprises.