Research On The Relationship Of Managerial Overconfidence And Corporate Philanthropy

As an important way for enterprises to assume social responsibility,corporate philanthropy is increasingly attracting widespread attention in academia and business arears.In recent years,many scholars of domestic and foreign have studied on motivation and influencing factors of corporate philanthropy from different angles.However,most of the existing research focuses on corporate characteristics and institutional environment,ignoring the impact of corporate managers' personal heterogeneity on Corporate philanthropy.Overconfidence,as a common cognitive deviation among corporate managers,has an important impact on corporate philanthropy.Therefore,this article studies the relationship between managerial overconfidence and corporate philanthropy.This paper uses upper echelons theory,principal-agent theory,stakeholder theory and resource dependence theory as the theoretical foundations to discuss the impact of overconfident executives on corporate philanthropy.This paper selects from 2013 to 2017 of all listed companies in Shanghai and Shenzhen as the research object and comprehensively uses the research methods of literature review and empirical testing.The results of the study show that managerial overconfidence is significantly negatively correlated with corporate philanthropy.Considering that the internal and external operating environment of the company will affect the relationship between the personal characteristics of executives and corporate decision-making,this paper takes the quality of internal control and the attention of securities analysts in the capital market as adjustment variables.In order to further explore the relationship between managerial overconfidence and corporate philanthropy giving in different operating environments.The empirical results show that the quality of internal control and analysts' attention to the company have strengthened the negative impact between managerial overconfidence and corporate philanthropy.The research results show that internal control and analyst attention,as internal and external company governance mechanisms,can effectively restrain the excessive donations of enterprises caused by managers 'opportunistic motives,but they cannot alleviate the negative effects of managerial overconfidence on corporate philanthropy.To a certain extent,this paper enriches the relevant research on the causes of corporate philanthropy,and provides further empirical evidence for the impact of executives' overconfidence on the company's strategic decision-making.The research conclusions of this article have certain significance to practice.First,companies should be vigilant about the negative impact of managerial overconfidence on corporate philanthropy.Overconfident managers may ignore the interests of secondary stakeholders that are broad and lack specific reference for a long time,and accumulate risks for the company's business development.Second,the internal control system and analysts' attention can not alleviate the negative effects of managerial overconfidence on corporate philanthropy.The negative impact of managerial irrational behavior of overconfident executives on the external corporate governance mechanism is hard to be detected in the short term perhaps is the reason.Based on the above analysis,we suggest that companies can limit the power of managers to reduce the negative impact of managers' personal cognitive bias on corporate decision-making.