Management Overconfidence, Corporate Governance And Inefficient Investment

Business investment problems that have been practitioners and theorists care priorities. Short-term business investment companies involved in the business to implement a long-term strategic relationship to the lifeblood of business. However, theoretically, if the market is completely balanced, the company’s investment decision should depend only on its investment opportunities. However, due to the real world all the friction, the company’s investment activities in a wide range of non-efficiency of the phenomenon exists. Be relaxed for non-efficiency investment, agency costs based on the assumption of rational explanation angle brokers, information asymmetry, but accompanied by in-depth research, combined with psychology, behavioral economics management theory and research in science, rational people assume that managers irrational factors related to heterogeneous characteristics began to be considered, recent studies have begun to consider the managers confidence, manager of personal background characteristics. Although these studies are different, but not contradictory in itself, just as the elephant touched by blinds, is investment-driven mechanism to explore different perspectives on the entire non-efficiency, and there are many related internal conduction mechanism, so accompanied on deepening of non-efficiency research, under the assumption of rational and irrational assumptions motivation constantly blend, scholars began to consider whether there are non-efficiency under the assumption of rational motivation defense system able to withstand the impact of irrational motives. Based on enterprise performance point of view, senior equity holders angle, measured in terms of corporate risk managers overconfidence bias, based on the perspective of internal governance mechanisms directly and indirectly control the external environment to examine the quality of corporate governance, managerial overconfidence bias found inefficient investment enterprise with enhancements for enterprise also has enhanced the effect of over-investment, but the lack of business investment has no effect; corporate governance for companies with inefficient investment inhibitory effect on excessive investment for businesses also have inhibitory effects; whether internal governance oversight or external governance mechanisms are unable to eliminate managerial overconfidence bias for business investment impact.