Research On The Influence Of Manager 's Overconfidence On The Company' S Inefficient Investment

Investment is one of the company’s core financial decisions, it is the bottleneck restricting the growth of enterprise value, so the effectiveness of it will directly affect the achievement of financial goal: realizing maximization of enterprise value. With the development of social economy, companies become more and more active in the field of investment, the problem of Non-efficiency Investment also attract more and more attentions by practitioners, and the theoretical circles. On the one hand, the Non-efficiency Investment not only caused a huge waste of limited resources, but which also increased the financial risk; on the other hand, the explanatory power of traditional financial theory based on ―rational economic man‖ for Non-efficiency Investment declined.An important feature of the modern enterprise system is the separation of management and ownership, so managers tend to have a decisive role. The principal agency problem, information asymmetry exists in reality determine the owners’ constraint on the management behavior to be often limited. Therefore, researches on Non-efficiency Investment based on the perspective of management behavior factors become an effective way to solve the trepidation of practitioners, and the theoretical circles.In this regard, this paper discussed the impact of managerial overconfidence to Non-efficiency Investment by selecting the A-share companies listed on stock exchange data from 2011 to 2013 based on behavioral finance theory and managers irrational perspective. Studies have shown that: overconfident managers affect Non-efficiency Investment by acting on the free cash flow, they will increase the sensitivity of the invested cash flow. Finally, this article puts forward some countermeasures and suggestions to alleviate the influence on enterprise efficiency of investment from the managerial overconfidence by completing manager’s selection, incentive and supervision mechanism, strengthening the management team building, the independent director system and the decision-making procedure.