Senior Executive Overconfidence,Enterprise Lifecycle And Corporate Investment

Efficient investment creates revenue for the enter:prise and realizes value appreciation.It can also improve the asset allocation efficiency of the whole society and promote the overall sustainable development of the national economy.As a decision-maker of corporate investment,the problem of enterprise investment efficiency brought about by executives' irrational psychological factors is a hot topic of scholars at home and abroad in recent years.Psychologists have shown that over-confident irrational psychology is common among individuals,and empirical results show that this phenomenon is more common among entrepreneurs and executives.Then,compared with rational executives,whether irrational executives are more likely to overestimate earnings,underestimate risks and accept more investment projects in investment decisions to achieve enterprise scale expansion is a problem worthy of attention.Moreover,it is worthwhile to discuss whether the level of corporate investment caused by the perceived bias of the executives who are overly optimistic about the future will cause excessive investment.And the dynamic factor of the life cycle on the relationship between the two cannot be ignored.In order to explore the above problems,based on behavioral finance theory and life cycle theory,this paper summarizes the research results of scholars at home and abroad.Using the cross-sectional data of domestic listed companies in 2015-2017 as a sample,this paper uses empirical analysis to study the relationship between executive overconfidence and corporate investment,considering the impact of the enterprise's life cycle.The empirical results show that:First,from the growth period to the maturity period,the level of overconfidence of executives shows a trend of rising first and then falling.Second,relative to rational executives,companies with overconfident executives have higher levels of investment and are prone to over-investment.As with overconfidence,over-investment also tends to rise and then decline throughout the life cycle.Finally,from the different stages of the life cycle,the relationship between overconfidence and over-investment has not always been significantly different.In the growth and maturity stages,the positive correlation between the two is significant and is significantly more pronounced at maturity.In the recession period,there is no significant correlation between the two.Different from the existing literature,this paper explores whether the rapid expansion will bring over-investment and explores the level of overconfidence and over-investment behavior while exploring the overconfidence of executives and promoting the expansion of corporate investment.The development trend at different stages of the life cycle shows that the changes of the two are synchronic,and have a more comprehensive understanding of the influence mechanism of the irrational psychological characteristics of the executives on the investment efficiency of enterprises.