| Recent years have seen "innovation-driven" as one of the most searched keywords,with enterprise innovation becoming a much-talked-about topic within the academic and business circles.The implementation of enterprise innovation-related decision-making hinges on senior managers,whose psychological traits enromously influence innovation investment and performance as well as underlying the strategy selection of enterprises'capital structure.Extensive research has indicated that senior managers tend to be overconfident when deciding on innovation.As pointed out by Galasso etal,overconfident senior managers are inclined to highly challenging R&D innovation investment.This essay looks into the influence of managers on enterprise innovation.Absent the psychological traits of senior managers,the validity of conclusion of this essay may remain questionable.In the light of this,it is strictly necessary to delve into how enterprise innovation is facilitated based on the hypothesis of irrational man.Also,due to issues such as agency and asymmetric information,how senior managers' overconfidence charts the course for enterprise innovation requires in-depth research.From the standpoint of senior managers' irrationality,this essay,recalling the existing domestic and foreign theories about enterprise innovation and capital structure,looks at the relationship between senior managers' overconfidence and enterprise innovation with the aim of defining the intermediary role of capital structure elasticity in respect of the influence of senior managers' overconfidence on enterprise innovation.This essay uses as research samples the data of enterprises listed on the A-share market during 2013 and 2018 and,based on theories of agency,balance and capital structure and through the combination of normative and empirical approaches,analyzes mechanisms related to senior managers' overconfidence and enterprise innovation.Accordingly,two hypotheses are put forward as follows:First,senior managers' overconfidence is significantly positively correlated to enterprise innovation.Second,capital structure elasticity acts as an intermediary regarding the influence of senior managers' overconfidence on enterprise innovation.By constructing the multiple linear regression model of senior managers'overconfidence versus enterprise innovation investment,this essay incorporates senior managers' overconfidence and the financial redundancy of capital structure into the analysis framework of factors that affect enterprise innovation in order to empirically investigate how capital structure elasticity acts upon the influence of senior managers'overconfidence on enterprise innovation investment.According to the research results,senior managers' overconfidence notably boosts enterprise innovation and capital structure elasticity serves as the intermediary between senior managers' overconfidence and enterprise R&D investment.This essay concludes with policy suggestions for the corporate governance of Chinese listed enterprises in anticipation of rationalizing the decision-making of enterprise innovation investment and increasing corporate value.This essay contributes its insights from three aspects:First,this essay neutralizes the view put forward by some scholars that the overconfidence of executives will surely lead to the distortion of managers' decision-making behavior.Second,relevant research is made more reliable by defining senior managers' overconfidence as reaching three or more out of the five standards to measure their confidence,by assessing enterprise innovation by menas of R&D investment and performance,and by quantifying capital structure through financial redundancy.Third,the updated research data along with more reasonable target variables for empirical analyses and the construction of regression model are employed to gauge the influence of senior managers' overconfidence on enterprise innovation,which generates abundant empirical data for relevant research and offers a fresh perspective into corporate value enhancement. |
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