The Influence Of Managers' Overconfidence On Corporate Donations

Today,companies have become an important force for economic development.People are not only concerned about the company performance,but also whether companies take up social responsibility.Corporate managers must consider many factors when committing social responsibility,come up with reasonable strategic decisions and make reasonable donations that become good deeds creating value for investors and truly help society.Corporate managers determine corporate strategies.Studies on how managers' characteristics,especially overconfidence,affect strategic decisions have been the subject of scholars' researches.Previous researches on managerial overconfidence mainly considered mergers and acquisitions,innovation,social responsibility and so on.The thesis examines the impact of managerial overconfidence on corporate donations.Previous studies have examined the relationship between managers and strategic decisions from the dimension of overconfidence leading to optimistic expectations.From the perspective of managers' dependence on stakeholders' resources,the thesis discusses how overconfident managers make corporate donation decisions based on upper echelons theory,stakeholder theory and resource dependence theory.Under the influence of different internal and external factors,overconfident managers will make strategic decisions if there are changes in the level of resource dependence on stakeholders.An empirical study based on data from Chinese listed companies from 2008 to 2018 found that overconfident managers have a negative correlation with the size of corporate donations.It showed that corporate managers believe themselves and resources they have as well as think their success depends less on stakeholders,so they make decisions to reduce the size of corporate donations.The relationship has strengthened when they are less dependent on stakeholders(more redundant resources),weakened when they need stakeholders(intense market competition).The following studies have verified that overconfident managers would reduce the size of strategic charitable donations.In addition,the thesis enriched researches on upper echelons theory and stakeholder theory.