Research On The Impact Of Managerial Overconfidence On Goodwill Impairment

In recent years,the number of mergers and acquisitions of companies listed on China’s Growth Enterprise Market(GEM)has proliferated and the scale of mergers and acquisitions has been huge,and goodwill on mergers and acquisitions has risen with the increase in mergers and acquisitions.In 2016,the goodwill of GEM companies was once several times higher than the net profit for the same period,but in 2019,there was a concentrated "explosion" of goodwill.Investors in the capital markets,faced with such a large impairment of goodwill,are beginning to wonder whether there are factors contributing to irrational management behaviour and further consider the impact of managerial overconfidence on goodwill impairment.This paper selects data on M&A restructuring of GEM listed companies from2013-2021,and on the basis of combing relevant domestic and international literature,uses the entropy TOPSIS method to construct a composite variable of managerial overconfidence,illustrates the effect of managerial overconfidence on goodwill impairment,explores the mediating effect of M&A performance between managerial overconfidence and goodwill impairment,considers whether M&A performance commitment have an impact in managerial overconfidence versus goodwill impairment,and finally,economic policy uncertainty is selected to examine its moderating effect on managerial overconfidence and goodwill impairment.Through the Tobit model empirical test,the study finds that(1)managerial overconfidence has a positive effect on goodwill impairment,i.e.,the higher the degree of overconfidence,the higher the proportion of goodwill impairment accrual;(2)managerial overconfidence is negatively related to M&A performance,and M&A performance plays a mediating role in managerial overconfidence and goodwill impairment;(3)compared to M&A cases without M&A performance commitment,the the positive effect of managerial overconfidence on goodwill impairment is more pronounced when M&A performance commitments are signed;and(4)economic policy uncertainty plays a facilitating role in the relationship between managerial overconfidence and goodwill impairment.Therefore,in view of the above analysis,this paper proposes three suggestions for optimization in terms of managerial quality,M&A performance commitment and economic policy uncertainty: improve managerial quality and rationalize management organization structure;optimize M&A performance commitment and strengthen information disclosure of M&A performance commitment;consider the influence range of economic policy and maintain the stability of economic policy moderately.