| "Innovation driven" is one of the hot search words which are concerned in practice and academia.However,the enterprise is the main body of scientific and technological innovation,then managers are the key players in business decision making.Therefore,the characteristics and decision-making behavior of managers will influence the effect of innovation driven.With the rise of behavioral finance,the relationship between managerial overconfidence and corporate investment has become one of the cutting-edge and hot issues.It is generally believed that managerial overconfidence will result in under-investment or over-investment,damage the enterprise value.Then,why will companies hire overconfident managers? In 2011,Galasso et al.answer this question firstly.They think that overconfident managers tend to take risks and are not afraid of failure,especially in the challenging activities such as R&D innovation,which can promote the innovation of enterprises.However,will the negative effects of managerial overconfidence on enterprise financing and investment disappear in innovation investment? How does managerial overconfidence influence innovation input decisions in the source of funds,decision-making behavior and decision-making results? At the same time,taking into account that the external financial environment and the development level of the city will also affect the enterprise innovation,is there any correlation between the impact channel and the characteristics of managers? This series of questions are less deeply studied in the literature.This paper sees the CEO who has the higher decision-making power as research object,using the method of theoretical analysis and empirical test,taking listed firms in SSE and SZSE as samples,which belong to information technology industry and manufacturing industry,and the sample period is 2002-2014.While our data are from CSMAR database and annual report by searching manually.We will research the effect of managerial overconfidence on innovation investment decisions,from the source of funds,investment decision-making behavior to decision-making results,to reveal hidden behind mystery.The main research results and contributions are as follows:(1)From the angle of ex ante measurement and psychology,the paper constructs the CEO overconfidence index based on CEO early promotion frequency index firstly.We find that the method not only conforms to the theory of self attribution bias,but also is more reasonable than the existing measurement methods.This paper makes bold attempt which not only provides a reliable theoretical basis for the empirical research,but also supplies valuable reference for future research.(2)By making two periods model of innovation investment and financing including CEO overconfidence,we find that overconfident CEO will depend on the internal cash flow in the process of financing,and the relation of cash flow and innovation investment is very sensitive.By panel regression for dynamic R&D investment model,we find that external equity financing has a significant positive effect on enterprise innovation,and overconfident CEO often loathe the external equity financing,rely more on internal cash flow.Further,this paper also distinguishes between fixed asset investment and R&D investment,and concerns about the under-investment.By the regression analysis of investment distortion model,we find that comparing with the fixed assets investment,the effect is more obvious of CEO overconfidence on the sensitivity of cash flow and innovation investment.In addition,CEO overconfidence will lead to innovation under-investment in the financing constraints enterprises.(3)By constructing the entrepreneurial vitality index,this paper focuses the perspective on the city level,analyzing the city effect of enterprise innovation and the impact channel,confirms the importance of entrepreneurial characteristics on enterprise innovation input.Further,we add the financing constraints variable in the existing CEO overconfidence career model,by the model analysis and empirical test,we find that CEO overconfidence can promote enterprise innovation investment,and the effect is more obvious for those firms of weaker financing constraints.(4)From the two levels of enterprise value and market reaction,this paper tests whether CEO overconfidence can further promote the enterprise's future performance by innovation investment.We find CEO overconfidence will enhance corporate value and stock return by enterprise innovation investment in uneasily financing constraintsof enterprises,but with lag behind.However,this conclusion is not valid in easily financing constraints of enterprises.From the theoretical model analysis to empirical test,from the macro level to the micro level,this paper obtains some new conclusions and new ideas of academic value and practical significance through the research of these three dimensions,such as the source of funds,the decision-making behavior and the decision result.This study not only enriches the theory of enterprise innovation and behavioral corporate finance,but also has important practical significance to enhance the enterprise value and select suitable management. |
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