Management Overconfidence And Corporate Inefficient Investment

China’s economy has benefited from the results of reform and opening up to achieve continuous high growth rates since the 1980 s.On the one hand,it stems from increased resource input,and on the other hand,from increased efficiency.However,the former is unsustainable,while the latter has a tendency to slow down in recent years.At present,China’s economy is facing many contradictions,and these contradictions are becoming increasingly prominent,and efficiency has become the center of cracking this problem.In recent years,the role of "human" psychological cognition in corporate decision-making has attracted more attention from researchers,who have begun to focus on the influence of managers’ cognition and overconfidence on decision-making behavior.The psychological factors of managers,especially the overconfidence of executives in investment projects,are key factors in differentiating corporate investments.Therefore,exploring ways to improve the efficiency of corporate investment under the vision of irrational factors has both theoretical and practical importance.Through compiling the relevant literature,we find that few scholars have examined managerial overconfidence,financing constraints and corporate inefficient investment in the same analytical framework,and few have studied the channels through which managerial overconfidence affects inefficient investment from an irrational perspective.Based on these shortcomings,in order to study the inner mechanism and the realization of enterprise investment efficiency,this paper collates and summarizes the domestic and foreign literature on managerial overconfidence and enterprise inefficient investment and elaborates the related concepts and theories.This paper takes the data of Chinese non-financial listed companies in Shanghai and Shenzhen A-shares from 2016-2021 as the research sample,and constructs a two-way fixed effects model with managerial overconfidence as the independent variable and corporate inefficient investment as the dependent variable including many control variables from the theory of corporate inefficient investment and its managers for empirical research:(1)this paper takes managerial overconfidence as the independent variable and corporate inefficient investment.(2)this paper takes financing constraints as the moderating variable and tests whether financing constraints have a moderating effect.(3)this paper takes financing constraints as the mediating variable and tests whether financing constraints have a mediating effect.(4)this paper uses panel threshold regression to test whether financing constraints have a threshold effect.(5)This paper uses a grouping approach to test whether managerial overconfidence makes a difference for inefficient corporate investment in different corporate nature contexts.The empirical findings of this paper show that(1)an increase in managerial overconfidence increases corporate inefficient investment and intensifies overinvestment.(2)financing constraints only have a moderating effect in the relationship between managerial overconfidence and corporate inefficient investment,inhibiting the managerial overconfidence in corporate inefficient investment.(3)managers of privately listed companies are more confident and more likely to influence corporate inefficient investment than state-owned listed companies.This paper reveals the mechanism of the role of financing constraints in the relationship between the two and proposes policy recommendations to improve the efficiency of corporate investment based on the findings,which is conducive to solving the practical problems faced by enterprises in their operation and development.