The Empirical Research Between The Managers’Overconfidence, The Control Of Large Shareholders And The Company Excessive Investment

It is an important issue of corporate governance research that haw to improve the efficiency of investment. Because of the key position. The company’s major shareholders and managements have an profound influence on the company investment decision. So in this paper, by adding the control of large shareholders as the corporate governance factors to investigate what is the influence do the managers overconfidence have on the excessive investment in Enterprises, that discuss the efficiency of the control of large shareholders in corporate governance.This paper referent the model of Richardson (2006), taking the managerial ownership change as a substitute variable that haw to measure the managerial overconfidence. And taking the fifth largest shareholder value as a proxy variable of the large shareholder’s control. And taking3073listing corporation which issue in the A of Shanghai stoke exchange and Shenzhen stock exchange as research sample during in2001to2010years. By using the method of descriptive statistics and regression analysis, the paper analyses the impact between the manager overconfidence and excessive investment in the company. And that analyses whether the control of large shareholders can inhibit the action of managerial overconfidence.The empirical results show that:Managerial overconfidence and the control of large shareholders are positively related to corporate investment, that show managerial overconfidence and the control of large shareholders will lead to the action of company invest excessively. Controlling shareholders is negatively related to managerial overconfidence-excessive investment, that show the major shareholders can protect their interests of shareholders under the condition of managerial overconfidence. They can curb overinvestment situation which caused by the managerial overconfidence. Thus their actions can play a supervisory role in the business activities.