Research On The Relationship Of Manager Overconfidence, Innovation Investment And Business Performance

With the continuous development of behavioral finance, the traditional theory of "rational economic man" hypothesis is constantly under attack. Scholars have put forward that person is not completely rational. As a psychological bias, overconfidence is widespread. Due to the special educational background and outstanding personal abilities, business managers is more likely to exhibit overconfidence. Scholars have also broadened the perspective of corporate governance, and gradually began to focus on that managerial overconfidence affect many aspects of business. Research shows that overconfident managers will overestimate project benefits and underestimate the risks faced, which will increase innovation. And since innovations can bring new technologies, new products for enterprises, to enable enterprises to maintain market competitiveness, and promote enhance corporate performance. Managerial overconfidence will impact corporate performance. Whether innovation investment will play an intermediary role? This article study the relationship between overconfidence managers, innovation inputs and Enterprise Performance based on the perspective of behavioral finance.In this paper, the standard research and the empirical research methods are used. Discusses the relevant literature and theories, Study on how the managerial overconfidence affects business performance and Put innovation investment as a mediating variable. This paper is divided into six parts. The first part is the introduction, describes the research background, purpose and significance, literature review, main contents and research methods, the paper innovation. The second part is a theoretical introduction, including the theory of managerial overconfidence, innovation investment and enterprise performance. The third part is the relationships analysis of manager overconfidence, innovation investment and corporate performance. The fourth part is the study design, put forward hypotheses and definite the variables. Data is selected from 2010-2014, companies listed on GEM. The fifth part is the analysis of the regression result. We use descriptive statistical analysis, correlation analysis and regression analysis. The sixth part is the conclusion and recommendations, through the analysis I find out the following conclusions:First, managers’ overconfidence can improve business performance. Second, managers’overconfidence has a significant positive impact on innovation investment. Third, the more innovation investment, the higher performance is. Fourth, investment in innovation is the way managerial overconfidence affect corporate performance.In this paper, based on behavioral finance broadens previous researches. It has important theoretical and practical significance to the research on the Manager Overconfidence, innovation investment and the on Business Performance.