Managerial Behavior,Business Life Cycle And Over-investment

Excessive investment by listed companies is largely due to the misconduct of managers.The characteristics of the separation of the two rights of modern enterprises make managers decide to invest the cash flow into which projects,so the managers’ behavior and style will naturally affect the investment efficiency of the enterprise.There are two paradigms in the study of managers’ behavior.One is that managers act rationally:agent act,and the other is that managers’ irrational behavior: overconfidence Numerous literature at home and abroad show that the manager agent act and overconfidence can lead to over-investment.However,these literature are studied from a static perspective and seldom combine rational behavior with irrational behavior to study the effect of both on excessive investment.This article attempts to our country real estate industry listed companies as samples,dynamic research from the perspective of enterprise life cycle to study the relationship between management behavior(agent act and overconfidence)and the excess investment,in order to provide useful inspiration to improve enterprise value,improve the corporate governance mechanismIn this paper,on the basis of literature review,with principal-agent theory,behavioral finance theory,and the theory of enterprise life cycle theory as a guide,selecting Shanghai and shenzhen two city real estate company data in 2008-2016 as the initial sample,sampling based on the classification of cash flow is divided into growth,maturity and decline each subsample sample,then use Richardson model tested the existence of excessive investment,.In variables through descriptive statistics,single factor variance analysis,for the construction of the model in different stages of the total sample and subsample OLS regression analysis to test the relationship between managers behavior and excessive investment,drawing the following conclusions:(1)from growth to maturity and decline,real estate enterprise management agent behavior in turn strengthens,and managers overconfidence is reduced in turn.(2)in the growth period,the factor that drive the excessive investment behavior of real estate enterprisesis the overconfidence of managers;In the maturity stage,the factors that drive the excessive investment behavior of real estate enterprises are the agent behavior and overconfidence of managers.In a recession,the factor that drive the excessive investment behavior of real estate enterprises is the agent behavior of managers.On the basis of empirical results,this paper puts forward the policy suggestions for over-investment.The excessive investment caused by the agent behavior of the manager can be restrained by perfecting the incentive mechanism,strengthening the supervision and establishing the reputation mechanism of the manager.The over-investment caused by overconfidence of managers can be restrained by improving the conservatism of accounting information and playing the role of media supervision.In each stage of the enterprise life cycle,the over-investment is managed according to the different motivations.