Comparative Study On Effect Of Managerial Overconfidence On Investment Dicisions Of Gem And SME Boards

As one of the three major activities of enterprises,investment activities affect the long-term development of enterprises.Also,whether these investment decisions made by the executives are reasonable and effective,they are directly affecting the value of the enterprise itself.As a consequence,this problem is one of the most important problems for enterprises' executives.This paper used listed companies in Growth Enterprise Market(GEM)and Small and Medium-size Enterprise Board(SME)as research objects,makingcomparative influencing study from managerial overconfidence of listed enterprises'investment decisions in this two market.Meanwhile,this paper checked whether there exists different levels of managerial overconfidence of listed enterprises in GEM and SME market,whether this psychological bias will lead to the emergence of inefficient investment activities,and these inefficient investment activities' possible effects to corporate value.Finally,this paper also verified whether these psychological bias will exacerbate the impact of inefficiency investment behaviors on corporate value.This paper chooses listed companies in GEM and SME markets from 2013 to 2015 as samples.First,this paper makes descriptive statistical of all samples.The results show that the level of managerial confidences of listed companies in GEM are significantly higher than those in SME.In other words,those managers of listed companies in GEM are more likely to become overconfidence than listed companies in SME.Then,this paper uses the expected investment model proposed by Richardson in order to measure related investment activities in GEM and SME markets,determining the existence of moderate and inefficient investment activities in different markets.Results show that it actually exists excessive or inadequate investment in inefficient investment behavior of GEM and SME markets.This paper establishes three main research models.First,it studies the influence of different levels of managerial confidence on inefficient investment in GEM and SME.Results show that different levels of managerial confidence will give positive impacts on inefficient investment behaviors.Then,this paper builds different models for the effects of inefficient investment on corporate value.Results show that what markets it being included,GEM or SME,the existence of excessive and inefficient investment behaviors will both cause a decline on corporate value.Through further analysis,it is found that inefficient investment behaviors are more harmful to corporate value.Finally,this paper builds models to verify whether managerial overconfidence will exacerbate the negative impacts of inefficient investment on corporate value in GEM and SME markets,and comparing the extent of listed companies in these two different markets.Results show that managerial overconfidence does increase the negative impacts of inefficient investment on corporate value,and being more obvious in GEM markets.Based on previous research results,from the perspective of managerial overconfidence's prevention and maintain a good level of self-confidence,this paper gives suggestions and measures for improving investment decisions in GEM and SME markets,to further reduce the level of inefficient investments,and thus weakening its negative impacts on corporate value.