The Influence Of Managerial Overconfidence On Inefficient Investment

Investment is an important way for an enterprise to gain interest and seek expansion.Rational and effective investment can make enterprises reduce risks,maintain competitive advantages and realize value increase of enterprises.On the contrary,alienated investment decisions may lead enterprises to despair.Most of the previous scholars at home and abroad explain the inefficiency investment from the perspective of principal-agent theory and information asymmetry,and have obtained certain research results.However,most of these documents are based on the hypothesis of "rational people" and think that investors are completely rational.In recent years,behavioral finance developed whip and spur,then,scholars gradually realize the psychological deviation of managers impact on the li:nvestment behavior of enterprises,especially the "above average effect" and "illusion of control" and "self attribution"and other psychological factors caused by managerial overconfidence.Therefore,enterprises often reduce the inefficiency investment behavior caused by overconfidence of managers through corporate governance mechanism.China’s capital market developed whip and spur.Institutional investors are widely involved in the company’s equity investment,in the same time,in the ownership structure,they also count a lot.With the advantages of scale,specialization and information advantages,to achieve effective supervision,and economies of scale make the institutional investors obtain supervision cost in monitoring activities in the benefits of investment,promote institutional investors to actively improve corporate governance structure.Different types of institutional investors are biased in terms of their professional ability,management experience and investment preferences.The heterogeneity of institutional investors will also inevitably affect governance effectiveness.To sum up,it is of great theoretical and practical significance to study the inefficiency investment caused by institutional investors and their heterogeneity to overconfidence of managers.Based on 2012-2017 years’ data of A-Share Listed Companies in Shanghai and Shenzhen,this paper empirically examines the impact of institutional investors on the relationship between overconfidence and inefficiency in management The study found:Managerial Overconfidence and corporate inefficient investment are positively related to the overall holdings of institutional investors can restrain the influence of Managerial Overconfidence on corporate investment efficiency;independent institutional investors can inhibit the positive correlation between Managerial Overconfidence and corporate inefficient investment,rather than independent institutional investors not to restrain.