An Empirical Research On The Influence Of Managerial Overconfidence On Corporate Investment

With the development of corporate behavior theory, the research about investment policy based on managerial overconfidence is becoming an important issue. However, the existing research mainly about the influence of CEO overconfidence on corporate investment in developed countries. In reality, according to the relevant theoretical and empirical research, listed corporate investment decision of China appears to be a kind of group behavior, personal characteristics of management group perhaps are a better predictor of corporate decisions than the CEO's characteristics alone. This paper tries to broaden the scope of managers, including the board of directors and all senior managers, and study the influence of management group overconfidence on corporate investment. In addition to that, the paper studies the influence of single manager overconfidence on company investment compared to the managent group.This paper adopted the norm analysis method and example analysis method to research,which is divided into five parts. The first part is the introduction about the background and the significance of the issue.The second part is about review of literature, after reviewing and summarizing existing research, the paper considers group overconfidence as the starting point,then chooses the profit forecast method and the managers shareholding method to measure the overconfidence of management group and chooses remuneration method and CEO shareholding method to measure single manager overconfidence. The third part is about research method and design. The forth part is about empirical analysis. These two parts is the main content of this paper, which firstly puts forward hypotheses on basis of the theoretical analysis, and then takes 2007-2008 as the observation period and chooses non-financial A-share listed company as a sample to research including descriptive statistics and multiple regression analysis,and draws conclusions at last. The fifth part is about conclusions, in which conclusions are summarized and limitations and further research directions are pointed outThe main contribution of this paper is to break the previous studies which is about single CEO over-confident, and broaden the scope of managers, including the board of directors and all senior managers, to study the influence of management group overconfidence on corporate investment. The main conclusions can be summarized as follows:(1) the influence of overconfidence of management group,including the board of directors and all senior managers, on corporate investment is more significant and stable than single manager overconfidence. (2) the level of investment is higher for company with overconfident managers.(3) the investment-cash flow sensitivity is higher for company with overconfident managers.(4) investment-cash flow sensitivity of overconfident managers is related to financing constraints weakly.(5) there is the phenomenon of over-investment for the majority of listed companies in China.