Economic Enviroment For The Early Growth Of Chairman And Investment Decision

Investment decision,as one of the most important decisions of an enterprise,is of great significance to the promotion of enterprise value and the maintenance of competitiveness.At the same time,the investment behavior of the enterprise also has special effect in pulling national economy to develop a respect.In a perfect capital market,companies would invest in projects with positive net present value until the investment structure of the company reached the optimal state.However,in the actual capital market,problems such as principal-agent problem,overconfidence of managers and risk preference will lead managers to invest in enterprises with negative net present value,thus damaging enterprise value.Chairman are the most direct decision-makers in business operation,and their decision-making styles will influence the investment decisions of enterprises.Based on this,this paper studies how the economic environment of chairman's early growth affects their risk preference,and then how it affects their later investment decisions.According to relevant theories in psychology and corporate finance,the better the economic situation that chairman's experience in the early stage and the faster the economic development speed,the more likely they are to form optimistic psychological expectation and risk preference,which will lead to excessive investment behavior.In order to verify this hypothesis,this paper selected data of a-share listed companies in Shanghai and Shenzhen from 2004 to 2016 for empirical analysis to verify the hypothesis.Research has shown that the faster the economy in which chairman grow in their early years,the greater the degree of over-investment they become as executives.After grouping regression according to property rights,we find that this effect is more significant in non-state-owned listed companies.This shows that the personal characteristics of middle and senior managers of non-state-owned listed companies can be more fully reflected,and the managers of state-owned listed companies will also be restricted by policies.