Incentive alignment or agency conflict? Executive incentive schemes and corporate investment efficiency

China’s ongoing transition toward high-quality development has heightened the importance of improving corporate investment efficiency and understanding the governance mechanisms that shape managerial decision-making. Executive incentive schemes—ranging from explicit monetary and equity incentives to implicit on-the-job consumption—play a critical role in influencing how firms allocate capital. Using a large panel of Chinese A-share listed firms from 2009 to 2023, this study investigates the effects of different incentive forms on corporate investment efficiency. The empirical results from multiple regressions and quantile analyses show that both monetary and equity incentives significantly enhance investment efficiency, particularly in firms with stronger governance structures and higher existing efficiency levels. In contrast, on-the-job consumption exerts a pronounced negative impact, especially in firms with weaker governance, by exacerbating agency problems and distorting resource allocation. Further analysis confirms that monetary and equity incentives improve efficiency partly through reducing agency costs, whereas on-the-job consumption increases such costs. This study enriches corporate governance research by uncovering the heterogeneous impacts and underlying mechanisms of various incentive strategies and provides practical implications for optimizing incentive design, strengthening governance quality, and promoting more efficient and sustainable corporate investment behavior.