Research On Executive Overconfidence And R&D Expenditure Stickiness

Innovation is the driving force for enterprises to achieve sustainable development.The key to innovation success depends on continuous investment in R&D projects.The capital of R&D investment is mainly rooted in the accumulation of internal funds brought by enterprise sales income.Therefore,when sales income changes,the enterprise’s internal funds will change,which will affect the scale of R&D expenditure.Due to the high adjustment cost,sunk cost,future economic benefits and other attributes of R&D investment,the R&D expenditure of enterprises shows the characteristics of easy increase and difficult decrease,that is,when the sales income changes,R&D expenditure and income are likely to show asymmetric changes,that is,R&D expenditure stickiness,but the existing literature lacks attention to such problems.In addition,as the main body of R&D innovation activities,executives’ personal characteristics determine their decision-making style.When executives have overconfidence psychology,does entrepreneurship such as risk-taking and innovation-seeking play a regulatory role between R&D expenditure and sales income?The above issues deserve further exploration.Based on the above thinking,this paper takes the data of Shanghai and Shenzhen A-share listed companies from 2007 to 2020 as samples,and uses the classical cost stickiness model to investigate the characteristics of dynamic adjustment of R&D expenditure with the change of sales income.At the same time,combined with the theory of psychology and behavioral finance,this paper further explores the moderating effect of executive overconfidence on R&D expenditure and sales income.It is found that the reduction of R&D expenditure when income falls is smaller than the increase of R&D expenditure when income rises,that is,there is R&D expenditure stickiness.At the same time,executive overconfidence will significantly enhance the R&D expenditure stickiness of listed companies.Further research shows that high-tech enterprises and enterprises with more intense external product markets have higher R&D cost stickiness,and the role of executive overconfidence is further enhanced.The research not only enriches the literature on stickiness and R&D investment,but also reveals that overconfidence executives can maintain the sustainability of R&D investment,expanding the positive role of overconfidence executives in R&D innovation activities,and has important theoretical and practical significance for the construction of high-level management teams in enterprises.