Research On The Relationship Between Overconfidence Financial Flexibility And Overinvestment Of Managers

Investment is one of the most important economic activities of a company,which plays a vital role in improving the value of the company.With the continuous development of our economy and the promotion of deepening reform,the government and market have put forward higher requirements for the efficiency of corporate investment.In June 2006,SASAC issued the Interim Measures on Investment Supervision and Administration of Central Companies,which regulated the investment activities of state-owned companies.After the global financial crisis in 2008,in the face of the risk of a hard landing in our economy,in order to stimulate domestic demand of economic development,the government launched a series of measures to promote economic growth.The scale of China's investment rapidly grew under the guidance of the policy,and inevitably,during the process,the problem of sloppy investment and low investment efficiency emerged.In 2016,the government proposed supply-side reform to guide our economy from high-speed growth to high-quality growth.Improving the efficiency of investment is a vital part in the process of promoting the marketization of our economy and achieving the deepening of economic reform.In recent years,domestic and foreign scholars are not satisfied with the traditional economic "rational person" hypothesis.From the perspective of incomplete rationality to explore the impact of psychological deviation of corporate managers on corporate economic decision-making,the most typical psychological deviation is managers overconfidence,Roll first put forward managers' " arrogance " in his research,which will affect the efficiency of investment.As for the measurement of managers' overconfidence,some studies use relative compensation with prior representation,while others use more post-feedback managers' stock increase.According to psychological research,the effects of overconfidence on the economic activities of companies under different measurement methods are different.To this end,this paper explores the effect of overconfidence only through one measure and overconfidence through two measures at the same time,and considers the moderating effect of financial flexibility on the relationship between overconfidence and overinvestment.In order to provide the basis for understanding the investment behavior and financial management means of the company.Based on the theoretical results of psychology and the availability of empirical data,this paper explores the influence of different measures on overinvestment,and finally considers the moderating effect of cash-holding flexibility and debt flexibility on managers' overconfidence to promote overinvestment,combined with the industry characteristics and whether the company is a state-owned company.The group studies whether the promotion effect of managers' overconfidence on overinvestment is different,which provides a reference for improving the financial management means of Chinese companies and taking advantage of managers' overconfidence.Overconfidence obtained by different measures can promote overinvestment behavior in Chinese Listed Companies.When manager's overconfidence is measured by only one test method,overconfidence measured by relative salary can promote overinvestment behavior more significantly.When the situation of managers' overconfidence is measured by two measures,the degree of overconfidence of managers is higher,and with the improvement of the level of managers' overconfidence,the overconfidence behavior of the company is increasing.Which is more pronounced in regulated industries than in unregulated ones.With regard to the moderating effect of holding financial flexibility,holding cash flexibility will positively regulate the promoting effect of managers' overconfidence on overinvestment;the company's holding debt flexibility reverse adjusts the promoting effect of managers' overconfidence on overinvestment.