Empirical Research On The Impact Of Managerial Overconfidence On Overinvestment

Company investment activities for the company growth and future provides cash flow,the manager's investment behavior correctly or not will directly influence on the realization of the value of the company,many companies in reality,however,there are different levels of investment distortions.General theory research suggests that many factors can cause inefficient investment behavior,such as investment decision makers the limitations of their knowledge and ability,failed to fully grasp the market information,market environment change and policymakers self-interest behavior and so on,can cause the inefficient investment behavior of the company.In recent years,domestic and foreign scholars on corporate investment decisions on a large amount of theoretical and empirical research,but these studies are mostly based on the basis of traditional financial theory,in the study of enterprise investment decision did not consider the psychological characteristics of managers,especially when managers overconfidence influence on enterprises investment behavior.In fact,due to the reality of people's actual decision-making behavior and the rational economic man supposition difference is bigger,so the psychological characteristics of administrators shall be also included in the study of factors affecting enterprise investment decision.This article from the perspective of behavioral finance,first of all,research managers overconfidence influence on enterprise over-investment;Secondly,study the different level of the cash flow,the relationship between overconfidence and excessive investment;Finally,the introduction of equity checks and balances the variables,the equity checks and balances for managers overconfidence the governance effect of distorting business investment.Research shows that: first of all,overconfident managers tend to excessive investment;Second,the abundant cash flow increased managers overconfidence of significance of the impact of excessive investment;Based on the viewpoint of ownership balance,finally found out equity checks and balances for managers overconfidence of investment distortions has certain governance effect,relative to equity balance degree is low,the higher equity checks and balances its effect is relatively good,at the same time in different nature of the equity shareholders have different effect of checks and balances,relative to the state-owned shareholders,non-state shareholders of checks and balances the effect is relatively good.