Research On The Relationship Among Managerial Overconfidence,Enterprise Inefficient Investment And Corporate Performance

With the development of modern behavioral finance and the continuous in-depth study of domestic and foreign scholars,the research conclusions based on the hypothesis of "rational economic man are constantly questioned and criticized by the academic circles.The concept of"irrational person" has been introduced into the study of financial theory,enriching and improving the traditional financial theory as a new paradigm.Among them,overconfidence,as the most common and stable psychological characteristics of managers,has become the preferred research object of scholars under the hypothesis of "irrational person".However,through reviewing and sorting out the relevant literature,this paper finds that the relationship between Managerial Overconfidence and corporate performance has not been thoroughly and effectively solved.Although some scholars have explored the relationship between managerial overconfidence,inefficient investment and corporate performance,few scholars have really answered whether inefficient investment plays a"bridge" role in the relationship between Managerial Overconfidence and corporate performance.Therefore,based on this,this paper tries to find out whether managers overconfidence affects corporate performance through the intermediary role of inefficient investment through the construction of intermediary effect model.Taking manufacturing enterprises in Shanghai and Shenzhen Stock Exchanges from 2013 to 2017 as samples,this paper regards managerial remuneration method as a measure of managerial overconfidence,regards Richardson' s residual model as an alternative variable to inefficient investment,and regresses the moderated intermediary effect model.The main conclusions are as follows:(1)Overconfident managers' psychological bias will significantly damage the performance of enterprises;overconfident managers often show alienation of behavior,which is reflected in the deviation of enterprises from the best capital structure,the best investment scale,the wrong strategic plan,and the deviation of enterprises from the normal business track.(2)Overconfidence of managers will aggravate the occurrence of inefficient investment.On the one hand,when the capital flow is insufficient,overconfident managers will avoid external financing and have to reject investment strategies beneficial to the long-term development of the company,resulting in underinvestment;on the other hand,overconfident managers will accept projects with actual net present value less than 0 because of "optimism" overestimating future cash,resulting in overinvestment.(3)The inefficient investment behavior of the enterprise will seriously damage the performance of the enterprise.This is due to the unreasonable allocation of enterprise resources and the influence of the income of the enterprise whether the enterprise has excessive investment or insufficient investment.(4)The inefficient investment of enterprises plays a part of intermediary role between managers overconfidence and enterprise performance,which indicates that overconfident managers influence enterprise performance partly through the inefficient investment behavior of enterprises,and may also influence enterprise performance by affecting other dec-ision-making of enterprises.Based on the empirical results of the intermediary effect model,this paper puts forward reasonable suggestions on corporate governance mechanism,selection and daily management of top management,which will help to solve the practical problems faced by enterprises in reality.