Executive Overconfidence,Large Shareholders’ Balance,and Technological Innovations Of Enterprises

Under the guidance of the strategy of innovation-driven development,the state attaches great importance to technological innovation,and the investment in innovation and the ability to innovate continuously increase.But Compared with developed countries,China’s innovation investment and innovation capabilities also have great room for improvement.For enterprises,the ability of technological innovation is the core competitiveness,the main source of their competitive advantages,and the driving force of their long-term development.Innovation resources are an important strategic resource for an enterprise,and innovation investment and performance are important indicators for measuring a enterprise’s ability for independent innovation.As the implementers of technological innovation decisions and human resource elements,executives are the internal driving force of technological innovation of enterprises.Their personal characteristics determine the style of decision-making,and can significantly affect the investment and performance of technological innovation of enterprises.When executives have the psychological bias of overconfidence,it will significantly affect the company’s technological innovation decisions.For large shareholders,their interests are closely related to corporate interests.Driven by the “converging effects of interests” the greater shareholdings of major shareholders,the stronger the motivation and ability to intervene in executives’ management decisions,thus exerting balances on overconfident executives and influencing the technological innovation investment and performance.Based on the related achievements of psychology and corporate finance,this paper examines the internal correlation among“executive overconfidence-large shareholders’ balance-investment and performance of technological innovation in enterprises”.At the same time,in-depth analysis the the interaction of "executives overconfidence-large shareholders’ balance-investment andperformance of technological innovation in enterprises" from the three dimensions of corporate characteristics,industry characteristics and geographical area characteristics.This article selects A-share listed companies from 2009 to 2015 as samples to analyze the following aspects: first,to explore whether executive overconfidence has a significant impact on the enterprises’ technological innovation investment and performance;second,to explore whether large shareholders can balance the overconfident executives,if they can,whether the effect of balance on the technological innovation investment and performance of the enterprise is positive or negative;and thirdly,to explore whether the characteristics of the enterprise,the industry,and the geographic area significantly affect the overconfident executives’ technological innovation decision and the effect of major shareholders’ balance.The empirical results of this paper are as follows: First,executive overconfidence has an incentive effect on the investment and performance of enterprise’s technological innovation,but this incentive effect only exists in non-state-owned enterprises,technology-intensive enterprises,and enterprises registered in innovative cities.Second,large shareholders can balance overconfidence executives,but such balances have significantly weakened the incentive effect of overconfidence on technological innovation performance.Third,corporate characteristics and industry characteristics have a significant impact on the effects of lager shareholders’ balances.In state-owned and technology-intensive enterprises,the effect of large shareholders’ balances on overconfident executives has significant negative effects on the technological innovation performance measured by the two indicators.However,the characteristics of geographical area have no significant impact on the effects of large shareholders’ balanace.Based on the above empirical results,this paper proposes to improve internal corporate governance mechanisms and implement relevant national policies on technological innovations,to create a good internal and external environment for technological innovations.