Research On Managerial Overconfidence,Internal Control And Corporate Investment

As a hot topic in the field of financial accounting,the investment behavior of enterprises has attracted the attention of many scholars.Investment inhibition is considered to be one of the three carriages to stimulate economic growth.On the macro level,it is closely related to the growth of a country's GDP.After the outbreak of the financial crisis,our government has also invested four trillion funds to promote economic growth and implement investment pull plan.On the micro level of the enterprise,investment can bring a series of future cash flows to the enterprise,and directly related to the business risk and profit level,which will affect the decision-making of enterprise financing and the subsequent dividend distribution and so on.The importance of investment is self-evident.However,in reality,the investment level of enterprises often deviates from normal,resulting in over investment and underinvestment.The traditional financial theory uses the theory of information asymmetry and the principal-agent theory to explain the abnormal phenomena of these investments.However,the assumption that the managers are "rational economic man" is not reasonable except for the above factors.If the managers are not completely rational,their psychological deviations will also reflect a series of daily decisions,such as investment,financing,dividend distribution and merger and acquisition,which have an impact on the enterprise.Therefore,based on the study of psychology,we find that the most common psychological deviation of overconfidence is included in the study category.From the perspective of overconfidence,we study the influence of the psychological deviation on the investment behavior of the enterprise.At the same time,in the early 21 Century,after the outbreak of large scale financial fraud cases,such as Enron and World Com,many countries of the world began to pay attention to internal control,and promulgated laws on internal control,and strengthened the construction of internal control system of enterprises.As an important means of company management,internal control can affect the overconfidence of managers to a certain extent,thus effectively restraining the inefficiency of enterprise investment.Based on the limited rationality of managers,this paper explores the influence of overconfidence of managers on enterprise investment decision,and introduces the moderating variable of internal control,and takes into account the factors of property.From the two aspects of theory and practice,we study the influence of overconfidence on the investment level of enterprises,and the moderating effect of internal control.By combing the previous literature,we put forward the corresponding hypotheses based on the related theories,and used multivariate regression model to explore the relationship between variables.In this paper,the data is selected the A share listed companies in China in 2012-2016.We use the increase of the number of managers' voluntary stock ownership to measure the overconfidence,and the internal control index is used to measure the internal control level of the enterprise.After a series of screening and data processing,9491 samples were finally obtained,including 3262 overconfident samples and 6229 non overconfident samples,using STATA14.0 to carry out regression analysis,and finally got the following conclusions:(1)Compared to rational managers,overconfident managers can significantly improve the investment of enterprises.(2)Internal control can regulate the relationship between overconfidence and enterprise investment,which has a negative adjustment function,that is,with the improvement of internal control level,the positive relationship will be weakened.(3)For enterprises with different property rights,the role of internal control between overconfidence and investment different.compared with state-owned enterprises,the negative effect of internal control to overconfidence and enterprise investment level is stronger in non-state-owned enterprises,and can weaken the positive impact of overconfidence on investment level.From the perspective of overconfidence in psychology,this paper studies the impact of overconfidence on corporate investment decisions,and introduces internal control.It can enrich the theory of overconfidence in managers,and provide a theoretical basis for how to effectively correct overconfidence.Suggestions for corporate governance and personnel appointment will also help enterprises to effectively identify the irrational behavior of managers and effectively prevent and control,so that enterprises can develop healthier in the long run.