The Empirical Research On Manager Overconfidence And Corporate Investment

Enterprise's investment behavior always is the key point of fundamental research on economic, finances, industrial organization and so on. In the real life, compare with the most superior investment scale in some theoretical analyses, the corporate always invest insufficiency or excessively. The microscopic corporate investment distortions possibly can cause macroscopic investment distortions. From this angle, enterprise's investment behavior is the key point when a country formulates the macroeconomic policy. In order to formulate the appropriate economic policy, the question of why the corporate invest distortedly needs to solve theoretically. But the traditional investment theory, which only considerate on how to decide the most superior scales of corporate investment, can not help us to answer this question. Just as Modigliani and Miller said, the MM theorem, as well as he traditional investment theory, is the establishment in a series of suppositions foundation. Therefore, the corporate theory must breaks through these suppositions to solve the invested distortion question.Compares with the traditional theory, we propose an alternative explanation for investment-cash flow sensitivity and suboptimal investment. We argue that manager overconfidence can account for corporate investment distortions. Overconfident managers overestimate the returns to their investment projects and view external funds as unduly costly. Thus, they over invest when they have abundant internal funds, but curtail investment when they require external financing. Concretely, we summarized the domestic and foreign correlations theory and the research results, as well as analyzes the characteristic of our country's listed company, sets up the overconfident measure, constructed the multi-factors of the influence to corporate investment return mode, proposed the reasonable supposition, used data on Chinese Listed Companies from 2001 to 2006 as the research object, used the empirical research method of multiple linear regression, and unifies the actual situation of our country, exploit the tendency of some managers to purchase additional company stock as the overconfident measure to examine the relations of overconfident and corporate investment.The result was that: (1) The overconfidence level of managers are related to the level of the company' investment. (2) Compared with other companies, the investment-cash flow sensitivity of companies with overconfidence managers are higher. (3) Financing constraint does not affect the investment-cash flow sensitivity of companies with overconfidence managers. This thesis is divided into five parts altogether.