Research On The Relationship Between CEO Overconfidence,Decision Power And Performance Fluctuation Of Listed Companies

The traditional theory of corporate financial behavior thinks that the managers'decision-making action is "rational",and they will make rational decision behavior for maximizing the value of the company.As one of the core managers of the company,CEO is the maker of the company's goals and policies,and plays the most important role in the specific decision-making activities of the company,then always makes rational decisions for maximizing the value of company.With the in-depth study of corporate financial behavior theory in domestic and foreign academic circles,scholars find that managers also have irrational behavior of overconfidence for a variety of reasons,which leads to abnormal fluctuations of corporate performance.And then the company's operating performance will have a greater abnormal impact.Ultimately,overconfidence is a subjective bias,whether or not CEO's decision is successful,may aggravate the fluctuation of the company's performance and cause the decline of the company's value,so it is worth while doing a more far-reaching analysis.In addition,Whether the enhancement of CEO's own power will have a moderating effect on this need,it will need to start a further study and discussion.My paper has two main innovations:First,the innovation of research perspective.This paper will try to study the relationship between CEO overconfidence and performance volatility of listed companies,and consider the relationship between the two properties under different property rights rather than traditional research,which is the study of the relationship between overconfidence and the company's performance level.Second,introduce mediation variables of decision power.From the internal and external factors generated by the irrational behavior of the CEO as a resting point,we will further explore the influence of decision-making power on CEO overconfidence and performance fluctuations.The concrete structure of this paper is as follows:Chapterl is introduction.This part mainly describes the background and significance of the topic.The significance of the research is from the theoretical and practical description.In addition,this part also introduces the research methods and innovative points of this paper.Chapter2 is the literature review.This part mainly introduces the CEO overconfidence,corporate performance,the influencing factors of performance fluctuation,CEO overconfidence and corporate performance volatility,concepts of decision-making power.I elaborate the five aspects at home and abroad.Finally,a review of the above five aspects is carried out.Chapter3 is the basis of related theoretical analysis and hypothesis.This part introduces the development of behavioral company finance theory,overconfidence theory and manager power theory in detail.And on this basis,the corresponding research hypotheses are proposed.Chapter4 is an empirical research design.This part describes the detail of how to select samples and finds out where the data comes,variable setting and definition,regression model setting.Based on these,they will make a basis for the following empirical test.Chapter5 is the empirical research process.In this part,descriptive statistical analysis,correlation analysis,regression analysis and robustness test are carried out.After the output of the data is obtained,I will analyze the output.Chapter6 is research conclusions and outlook of the research.This part is mainly to summarize the conclusions of the above empirical analysis,and put forward the corresponding policy recommendations,and finally points out the deficiencies and prospects of the research.Summing up the conclusions of this paper,there are five main aspects:(1)CEO overconfidence has a significant positive correlation with corporate performance fluctuation;(2)The influence of CEO overconfidence with corporate performance volatility in non-state-owned listed companies is stronger than that of state-owned listed companies;(3)The strengthening of CEO decision-making power will enhance the correlation between CEO overconfidence and listed company performance fluctuations,and the level of significance is stronger;(4)The combination of CEO and chairman can enhance the correlation between CEO overconfidence and company performance volatility.(5)The level of corporate governance needs to be improved.According to the research conclusion,finally put forward corresponding policy recommendations:(1)Strengthening the CEO's cognitive level of overconfidence;(2)Strengthening the consciousness of CEO which is a healthy development of company in non-state-owned listed companies;(3)Establishing a good mechanism of CEO selection,appointment and incentive;(4)Allocating CEO's power reasonably,establishing an effective supervision and restraint system;(5)To establish an effective corporate performance evaluation mechanism for the CEO.