Abstract: SOEs in our countries not only control the normal operation of national economy, but also take social responsibilities such as increasing employment, narrowing the gap between the rich and the poor. This paper makes an empirical study of the relationship between promotion incentive, salary incentive and over-investment of SOEs based on 2008-2014 data, finding both promotion incentive and salary incentive will urge over-investment of SOEs and these two incentive systems have substitution effect on over-investment; the business SOEs are more inclined to over-investment compared with public interest SOEs, and are more likely to be influenced by promotions incentive and salary incentive. Therefore, during the process of deepening the reform of SOEs, we should make classification management to different functions SOEs to increase efficiency of investment of business SOEs; on the other hand, government should make full use of material incentive and non-material incentive to lead investment of SOEs; promotion incentive should decrease the phenomenon of “relationship promotion”, State-owned Assets Supervision and Administration Commission(SASAC) should play the “gatekeeper” role of investors′ interest.

Key words: promotion incentive, salary incentive;SOEs, over-investment