Research On The Effects Of Manager's Overconfidence On Investment Behavior Of Listed Companies

Since the 1980 s, market anomalies frequently happening, the traditional "rational" hypothesis has been questioned. Affected behavioral economics, finance has introduced the relevant theoretical achievements of psychology and behavioral sciences, and formed a paradigm of behavioral finance. Under the new paradigm, a lot of theory generated around the core ideas of individual cognitive biases unfolded, and overconfidence theory is one of them. Currently, the impact studies for managerial overconfidence in corporate investment decisions are in small, domestic and foreign researchers focused on investor overconfidence in the financial markets. This article in behavioral finance framework, on the basis of managerial overconfidence theory, to business investment as the starting point, listed companies of China's manufacturing industry for the study, uses the corrected managers relative pay to measure managerial overconfidence and explore managerial overconfidence on inefficient investment, mainly on over-investment,by using theoretical analysis and empirical research methods.And then combining with our special environmental factors, from the perspective of two external governance and internal financial markets, the article studies managers overconfidence factors. Finally, this paper summarizes the research findings and policy recommendations are given.Research, Firstly,introduces the basis of relevant theories, including the definition performance, the performance of overconfidence and cause analysis of overconfidence, the traditional investment theory, the non-efficiency investment. Secondly, bying managerial overconfidence on investment analysis of the impact theory and combining with China's specific environment,the article propose relevant assumptions from the perspective of external and internal governance of financial markets. Finally,the article uses managers relative pay to measure managerial overconfidence and chooses Shanghai A-share listed companies in the manufacturing sector as a research object, 2012--2014 year study period for the empirical analysis.Through empirical studies, the article has concluded that:(1) positive correlation exists between managerial overconfidence and corporate investment spending. And when there is sufficient cash flow within the company, if managers are overconfident,they will increase the company investment, the company with managerial overconfidence has higher investment cash flow sensitivity.(2) positive correlation exists between managerial overconfidence and corporate over-investment. When there is sufficient cash flow within the company, overconfident managers will tend to over-investment.(3) Over-investment behavior of listed companies because of managerial overconfidence is influenced by China's financial market ring Environmental. There is no sufficient internal cash flow, when investors in the financial market are overly optimistic on the company expectations, the more emotional high, higher stock turnover,but the extent of the overinvestment is weaker, managers investment is more cautious. The company has sufficient cash flow, when the financial market investors are overly optimistic on the company expectations, the more emotional high, higher stock turnover, the company has higher investment cash flow sensitivity,and the degree of excessive investment is stronger.(4) internal governance of listed companies affects the investment excesses leading by managers overconfidence. The larger board of directors, managers binding is weaker and the degree of over-investment is greater.Listed company independent director system can not play a restricted role in the investment excesses, which coincide with the status of corporate governance in our country, the vast majority of independent directors does not have the independence,so independent directors can not play an effective supervisory role.