| Business investment is an important activity in the value creation. People in academic area are mostly based on the Hypothesis of Rational Person, which ignoring the manager’s irrational psychological characteristics during the study on investment decision-making. Behavioral Finance considers that managers generally have psychological bias of overconfidence which might have a great impact on investment decisions.This article researches the influence on companies’ business investment due to managers’ overconfidence. According to the relevant references and theories, this article propose hypotheses dealing with the influence on business investment caused by manager’s overconfidence, through analyzing the data from GEM(Growth Enterprise Market) listed companies during 2011—2013. The result indicates that managers from GEM listed companies are more likely to be overconfidence than those from other kinds of listed companies. Moreover, there is a positive correlation between overconfidence and excessive investment from managers, which is very dramatic in GEM listed companies, furthermore, ROI(return on investment) and the earnings per share in GEM listed companies is lower than those other types.The most contribution of this article is reflected in the following aspects: Firstly, it introduces the theory of behavioral finance and analyzes the how managers’ psychological bias of overconfidence affects business investment from the perspective of the psychological characteristics of the manager, which enriches the existing corporate investment theory. Secondly, it discusses the differences impacts on investment decision between GEM listed companies and main board-listed companies through analyzing managers’ overconfidence bias, which provides reference for the explanation about inefficient investment behavior in GEM listed companies. |
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