The Empirical Research On The Relationship Between Managerial Overconfidence And Over-investment

Corporate investment activity is an important activity in the development of the company,as the basis for the growth of the company,to promote the growth of future cash flow.The value of a company is largely influenced by the manager's investment behavior.However,in the daily business activities,enterprises often have inefficient investment.More and more empirical studies have found that the strict assumption of rational people is not exist in the reality of enterprise management.With the in-depth study,the theory of cognitive psychology was introduced into the field of financial research,behavioral finance theory challenges the assumption of rational economic man,and studies the concept of manager's Irrationality.Therefore,this article from the different perspective,that is,the direction of the behavior of corporate finance theory,to explore the impact of the managers over the excessive investment.In this paper,the author first reviews the literature of domestic and foreign scholars,and adopts the appropriate indicators to define managers over confidence and excessive investment in enterprises.This paper selects all listed companies in Shanghai and Shenzhen A shares as empirical samples,researches the influence of managers over confidence on the company's over investment.Confirmed by the results of the study:first,the overconfident managers of listed companies will lead to excessive corporate investment managers,the level of self-awareness is not accurate,that its capacity higher than normal,easily leads to excessive investment;Second,when there are plenty of cash flow of enterprises,in order to save the cost of cash flow,reduce the level of cash flow,the company's managers want to use cash flow to improve the efficiency of the enterprise,then the overconfident managers tend to over investment;Third,compared with the non-state listed companies,the managers of the state-owned listed companies are more inclined to over investment;Fourth,the level of corporate governance will affect the excessive investment of enterprises.