The Correlation Study Of Managerial Overconfidence And Investment- Cash Flow Sensitivity -Based On The Perspective Of TMT Heterogeneity

Now investment has become the primary component of enterprise financial governance,but as the breeding of inefficient investment, mainly for that investment and cash flow is highly sensitive, scholars have tried to analyses the reasons in the perspective of principal-agent and financing constraints,However, both these theories assume that people is the absolute rational, in fact, psychology research shows that managers are often limited rationality in the behavior of the enterprise decision-making,overconfidence behavior in the process of strategic decision cannot be ignored. Furthermore, demographic characteristics of the senior team is one of the key determinants of executive behavior, It directly affect the managers’ attitude to investment projects.So from the perspective of TMT heterogeneity to explore the correlation of managers overconfidence and investment-cash flow sensitivity is great significance.This article adopts the method of combining normative research and empirical research to explore the correlation of managers overconfidence and investment-cash flow in the perspective of TMT heterogeneity. On the basis of reviewed the related research, this article combined with the free cash flow theory, behavioral finance theory, high JieTiXing theory, then put forward the relevant assumptions, and continue to use the investment model of Heaton (2002), through the regression analysis from 2011 to 2013 sample data try to draw relevant conclusions, The last step is offering some policy suggestions. Managers shareholding change is used to measure managers overconfidence in the above analysis,and the heterogeneity of TMT background perspective including four dimensions that is the management team gender proportion and the TMT heterogeneity of age, education background, term heterogeneity.This paper research includes two parts, the first one is:managers overconfidence and investment-cash flow sensitivity was significantly positively related, and in plenty of cash flow, managers tend to make excessive investment, on the contrary, in the case of cash flow is not abundant, managers will give up some investment with a positive net cash flows.Second, the heterogeneity of senior management team would significantly influence the relationship between managerial overconfidence and investment-cash flow sensitivity.It specificly included that enterprises with high ratio of the male members will deepen the relationship between the above two;The deeper degree of heterogeneity of executive team members age, education background and term will eventually inhibit managerial overconfidence,thus reduce the investment-cash flow sensitivity,but based on the data limitations,the results of studying in the heterogeneity of term didn’t pass the regression test,it needs further discussion and research.In view of this, the enterprise should improve the internal management confidence restriction mechanism and the selection mechanism of the senior management team members,establish personal comprehensive quality evaluation system, reduce the manager irrational behavior to improve the investment efficiency of enterprises.