Managers Are Overconfident, Internal Control And Corporate R&D Spending

The innovation ability of the enterprise directly affects not only the technical level of enterprises,but also the success to become a technology innovation oriented industrial country of our country in critical period of China's economic structure upgrading and transformation.A large number of research shows that the R&D expenditure and innovation ability of enterprise are closely related.However,the research and development spending as a micro individual which is a high risk investment activity,and there is uncertainly that R&D expenditure can be transformed into the economic profit of enterprises.Therefore,it is significant to study how to make the investment orderly and establish a blameless management system.Among the factors which affect the R&D expenditure and economic consequences of enterprises:Age,educational level,professional background,tenure,gender of the managers are more important.In general,the high level of education,professional skills,strong R&D background managers prefer investment,and long tenure managers due to risk aversion and tend to resist change,and prevent the enterprise investment in research and development.The relationship between gender and R&D expenditure shows that male managers are more confident,risky and other gender characteristics,prefer the risk decision and innovation programs of research and development activities.Therefore,from the perspective of emotional characters of managers,the research of relationship between managers' features and development investment is not only the expansion of existing research,but also an innovation.This article mainly study manager overconfidence impact on R&D expenditure from managers' perspective.Internal control system is an important part of the enterprise management system,while regulating the financial system,error correction system,investment system and so on a series of rules and behavior processes that need to use the "system" norms to restrain the R&In the internal control system of constraints and norms of the column.Based on considerations of the above-mentioned realistic and theory,This paper introduce two factors of managers' overconfidence and internal control,and analyze the influence of the two factors to business R&D expenditure respectively.Overconfidence represents the power of enterprise manager,and internal control represents the power of the enterprise management system.As the backbone powers of company,They together determine the innovation capacity of enterprises.In order to further test the above theoretical model,this paper verify the relationship between managerial overconfidence,internal control and corporate R&D expenditure by using A-share non-financial listed companies from 2009 to 2014 as samples.The paper is consist of five parts.The first part introduces the basic situation of this paper,such as the background,significance,the main frame,content,research methods and possible innovations.The second part is the literature review of domestic and overseas.The third part is the theoretical basis of the paper.The fourth part is empirical analysis.The last part is the conclusions and recommendations of this paper,mainly including summary of above,the interpretation of the meaning of empirical research policy,as well as the prospect of future research.The study has shown that,one hand,there is a significant negative correlation between overconfidence and corporate R&D expenditure,on the other hand,there is a significant positive correlation between internal control and R&D expenditure.Compared with non-SOEs,managers' overconfidence and internal control produced a more significant influence to R&D expenditure.The practical meaning of the empirical analysis conclusion is that,due to the self-aggrandizement caused by managers'over-confidence,The managers reluctance to invest in research and development activities,which may bring negative influence to company's innovative ability.Sound system and control measures can effectively curb excessive radical behavior of business leaders,and can effectively avoid the risk of incorrect R&D activities.Therefore,It should establish a sound internal control under the premise,and then to improve R&D expenditure,stimulate innovation.The nature of property rights of state-owned enterprises lead to managers more likely to produce absolute authority and absolute power,so it should more strengthen the constraints to manager's power behavior.