Managerial Overconfidence,Institutional Investors Shareholding Characteristics And Over-Investment

Investment activities play an important role in the operation of enterprises.High-efficiency investment activities can bring profitable income to enterprises,But how to invest efficiently is also the focus of scholars..However,the relevant data indicates that there is a large amount of over-investment behavior in the actual business activities of the enterprise.This phenomenon not only brings economic losses to the enterprise,but also causes a waste of certain resources.In recent years,scholars have paid close attention to this unreasonable over-investment problem while studying corporate investment activities.The investment decision of the enterprise is usually formulated by the manager.In the investigation of the over-investment problem,the influence of the manager's own factors on the over-investment must be considered.With the rise of behavioral finance,it has gradually broken the hypothesis that managers are completely rational.It is found that managers usually have too optimistic about their own abilities and decisions they make,and then overestimate the benefits of the project.The project's cost and risk are estimated to be low,prompting excessive investment.Since the 21st century,institutional investors,as an important part of China's capital market,have played an important role in corporate governance and can exert certain binding force on the company's investment decisions.In this paper,the institutional investors,adjustment variables are considered to affect the over-confidence and over-investment of managers.Research institutional investors can suppress managers' overconfidence and improve over-investment problems.At the same time,institutional investors cannot be generalized.The institutional investors with different characteristics have different effects on the supervision and management of enterprises.This paper refers to the data of China-Shenzhen A-share listed companies from 2011 to 2016.Based on the over-investment phenomenon prevailing in these companies,we use the theory of overconfidence,information asymmetry and corporate governance to examine the managers of listed companies.There is a clear positive correlation between overconfidence and excessive investment by the company.And further study whether the institutional investor shareholding will affect the positive correlation between over-confidence and over-investment of corporate managers,and whether the influence of institutional investors with different shareholding characteristics is the same,thus testing institutional investment.Can it play a corresponding role in curbing excessive investment,improve the effectiveness of corporate governance,and improve the efficiency of corporate investment?The results show that(1)the phenomenon that managers have excessive self-confidence tends to exacerbate excessive investment behavior;(2)Institutional investors' shareholding can significantly inhibit the positive correlation between managerial overconfidence and corporate over-investment;and the greater the proportion of institutional investors,the more effective the governance effect;(3)Compared with transactional institutional investors,stable institutional investors can restrain the positive relationship between managers' overconfidence and excessive investment,and can play a good role.Corporate governance effectiveness;(4)Pressure-sensitive institutional investors cannot play a supervisory role,compared with independent pressure-resisting institutional investors can suppress the positive relationship between managerial overconfidence and corporate over-investment,play a good governance effect.This article includes the following six parts.The first part is Introduction.The overall research framework of the thesis is put forward,and the research purpose and innovation of the paper are introduced by introducing the research background.The second part is a reference review.It reviews the theoretical literature related to over-confidence of managers and institutional investors,and the two are related to excessive investment of enterprises,which lays a theoretical foundation for the empirical research in the following.Reviewing the manager's overconfidence,institutional investors holding shares,and the empirical research literature related to corporate over-investment,provide empirical evidence for the empirical study.The third part,theoretical analysis and propose assumption,mainly includes the related concepts of over-investment,managerial overconfidence and institutional investors,and the integration of relevant theories.The fourth part presents hypotheses and model design.This is an important part of this paper,including research,variable definition,model construction,and analysis of data.The fifth part,data analysis and verification assumptions.This chapter mainly conducts empirical tests on data to build relationships between variables,and provides data support for verification hypotheses through descriptive statistics,correlation analysis,regression analysis,and robustness testing.The sixth part is to make recommendations and research prospects.According to the empirical results,suggestions for the company's investment activities,better improve the company's investment efficiency and achieve good governance results.Combined with the conclusions and analysis of this paper,the following suggestions are proposed:(1)Strictly supervise company managers and reasonably control overconfidence.(2)Improve the internal control system and external supervision mechanism.(3)Relax the introduction policy for institutional investors and fully mobilize the supervision and governance role of institutional investors.(4)Promote the diversified development of institutional investors and enrich the shareholding structure of listed companies.