Government’s Overconfidence And Enterprises Investment

The traditional financial theory is based on the assumption of "rational economic man",and behavioral finance begins to pay attention to human irrational psychological factors.For enterprise investment,foreign scholars took the lead in starting research enterprise management’s overconfidence,and found that management’s overconfidence affect enterprise investment.Domestic scholars have also studied the overconfidence.And considering the domestic institutional factors,they also study the impact of the political connection,government intervention and so on.However,it has not been mentioned whether the government’s overconfidence will affect the level of investment.The literature of the government’s overconfidence is hard to find.In this article,government’s overconfidence is measured by the text of the government work report using text analysis to build the variable.We use the 2003-2007 domestic listed companies as sample.Based on the empirical we have found that the government’s overconfidence has a positive impact on enterprise investment.In the overall sample,the difference between the local state-owned enterprises and private enterprises are not very significantly.But in the secondary industry,compared with private enterprises,local state-owned enterprises are impacted by the government overconfidence more significantly.Additionally,compared to smaller enterprises,large-scale enterprises are more likely to be affected by the government’s overconfidence.Corporate management will pay attention to the voice of the government,so the government needs to pay attention to words that used.The government’s attitude,expectation,intonation will affect the enterprise’s investment.Government can use it to guide enterprises to invest.This paper provides a new way of measuring the overconfidence of government,provides a way to measure emotional attitudes and tone,using the method of text analysis to construct the degree of overconfidence.