Research On The Impact Of Overconfidence Of High-tech Enterprise Executives On Cash Holding

In recent years,the cash holdings of enterprises are generally high,especially hightech enterprises which are easy to face financing constraints.Cash is just like blood to human beings.Reasonable cash holding is particularly important for high-tech enterprises with many investment opportunities,long product investment cycle and high uncertainty of industry environment.As a source of national innovation power,the development of high-tech enterprises will directly affect China's comprehensive national strength.Therefore,the study of cash holdings in high-tech enterprises is very in line with the current actual situation and needs.At the same time,executives of high and new technology enterprises usually have experienced professional and technical background,extraordinary courage and adventurous spirit,such as Robin Li of Baidu,Ma Huateng of Tencent and Zuckerberg of Facebook.Executives' professionalism and strong risk-taking spirit can lead enterprises to overconfidence while seizing investment opportunities in a timely manner.If you want to study the cash holding problem of high-tech enterprises,you must seize this characteristic.Based on the samples of high-tech enterprises from 2013 to 2017,this paper studies the influence of high-tech enterprises' executive overconfidence on cash holdings from the perspective of psychological factors of senior managers.Firstly,according to behavioral decision-making theory,trade-off theory and financing preferential order theory,this paper puts forward the hypothesis that there is a positive correlation between high-tech Executives' overconfidence and cash holding level,and establishes a multiple linear regression model to test it.Secondly,the board of directors,as the key organization of corporate governance,has the responsibility and power to supervise the overconfident behavior of executives.Institutional investors are becoming more and more active in the capital market and play an increasingly important role in corporate governance.In addition,the funds mainly come from the majority of social investors.Institutional investors will participate in corporate governance for their own interests.According to the principal-agent theory and stakeholder theory,this paper proposes the hypothesis that good board governance and institutional investors can effectively restrict the impact of high-tech enterprise Executives' overconfidence on cash holdings.Through empirical research,this paper mainly draws the following conclusions:(1)There is a significant positive correlation between high-tech enterprise Executives' overconfidence and cash holdings;(2)Whether the general manager is a director,whether the independent director is different from the company,the proportion of independent directors,the number of board meetings and the multiplier of executive overconfidence are negatively correlated with the level of corporate cash holdings;(3)There is a significant negative correlation between the level of corporate cash holdings and the number of board meetings.The sum of all institutional investors' share holdings is negatively correlated with the level of cross-over and cash holdings of Executives' overconfidence.In different types of institutional investors,the proportion of funds and qualified foreign investors is negatively correlated with the level of executive overconfidence in terms of multiplier and cash holdings,but not with securities firms,social security and insurance.Therefore,this paper draws the conclusions of this study:(1)high-tech enterprise Executives' overconfidence will make the enterprise have a higher cash holding level;(2)well-governed board of directors can effectively restrict the impact of Executives' overconfidence on cash holding level;(3)institutional investors who meet certain conditions can play an effective supervisory role and restrict the behavior of Executives' overconfidence.In addition,in view of the deviation between the research results and common sense expectations(common sense expects that overconfident executives will overestimate investment opportunities,resulting in overinvestment and thus make the cash holding level of enterprises low),this paper conducts further research on the overconfidence of executives,cash holding and overinvestment.Through logistic regression,this paper finds that there is a negative correlation between overconfidence and cash holdings of high-tech executives and overinvestment,but the relationship is not significant.When the explanatory variables are lagged for one period,the multiplier is positively correlated with overinvestment.It shows that overconfident executives overestimate the future rather than the current investment opportunities,so enterprises with overconfident executives tend to reserve large amounts of funds in the current period to meet the overvalued future investment needs.So the common sense expectation about the relationship between high-tech enterprise Executives' overconfidence and cash holding level is erroneous.The conclusions of this study can provide reference for high-tech enterprises,so that enterprises can attach importance to the problem of executive overconfidence and cash holdings.At the same time,it can make high-tech enterprises understand that corporate cash holdings can be influenced by the supervision of the board of directors and institutional investors.They should give full play to the role of both,and then adjust the cash holdings more scientifically and rationally.