A Emprical Research Of Managerial Overconfidence Impacting On Corporate Investment Field

Traditional investment theory has an important assumption, which is "rational economic man" hypothesis, it is to regard investors and managers as be rational, seeking to maximize their own interests. Since1980s, more and more evidence has shown that traditional financial theory and the "rational economic man" hypothesis have been unable to give a reasonable interpretation of anomalies in capital market. To make up the traditional finance theory, scholars use behavioral finance theory to explain the impact on the investment behaviors of the company caused by investors and managers'irrational. Roll(1986)[1]first introduced manager overconfidence in Corporation financial behavior, and then scholars gradually use theory study and empirical tests combination method to explore the impact of manager overconfidence on company's investment behavior. Nowadays, scholars'studies focus on how the manager overconfidence will effect company's M&A and expenditure, but few study on how the manager overconfidence will affect company's investment field.In view of the deficiencies and limitations of previous studies, we plan to put Managerial overconfidence as a starting point, based on the data of Shanghai and Shenzhen listed companies in2007-2010, using theory study and empirical tests combination method to explore the impact of manager overconfidence on company's investment field. Through this research, this paper gives the main results as follows:(1) Managerial overconfidence has an impact on the investment structure of Chinese listed company. Overconfident manager would like to cut the investment on long-term equity and raise the investment on current assets, fixed assets and intangible assets at the same time.(2) Managerial overconfidence has an evidently impact on the investment of current assets, fixed assets and intangible assets. Suppose the company's resources are invariable, the growing investment of current assets, fixed assets and intangible assets will share part of the long-term equity investment and finally make a change to the investment structure. Through this study, we would like to make it clear that how the manager overconfident will affect the company's investment behavior, and table a proposal to reduce the irrational investment due to managerial overconfidence.