The Impact Of Management’s Overconfidence And Institutional Investor Heterogeneity On Corporate Over-investment

Since the reform and opening up,investment has become one of the three carriages that drive economic growth and has played an important role in boosting China’s economic development.At the same time,investment is also the basis of all financial decisions of the enterprise,which can create cash flow for the enterprise and enhance the value of the enterprise.However,for a long time,the investment efficiency of most enterprises is not high,especially the over-investment of state-owned enterprises is particularly serious.How to alleviate excessive investment by state-owned enterprises,solve overcapacity and optimize investment allocation has become a serious problem facing us.In the past,scholars’ research on over-investment was mostly based on the assumption of “rational economic man”.It was explained by traditional financial theory such as principal-agent theory and information asymmetry.In fact,people who are completely rational do not exist.Compared with ordinary people,The degree of overconfidence of management is more serious.Therefore,it is of great practical significance to study the over-investment of enterprises from the perspective of management over-confidence.Institutional investors have always been regarded as an important external governance mechanism of enterprises,which can effectively improve the corporate governance environment,but In the past,scholars often neglected the heterogeneity of institutional investors in empirical research,and conducted a holistic study on institutional investors,and obtained two views of“shareholder activism” and “shareholder negativity”,and different institutional investors Because investment ideas and the like have different effects on corporate governance,they should be differentiated.This paper first reviews and sorts out the literatures of over-investment,managerial overconfidence and institutional investors and their heterogeneity by domestic and foreign scholars.Secondly,based on principal-agent theory,information asymmetry theory and over-confidence theory,theoretical analysis is carried out.The research hypothesis of this paper is put forward,and the data of Shanghai-Shenzhen state-owned listed enterprises in 2008-2017 is taken as a research sample,and the regression model is constructed to empirically test the hypothesis.The following three conclusions are obtained:(1)Managers’ overconfidence and state-owned There is apositive correlation between over-investment in enterprises,and the higher the level of managerial overconfidence,the more serious the problem of excessive investment in enterprises.(2)There is a significant negative correlation between the overall shareholding of institutional investors and the over-investment of state-owned enterprises,and compared with transactional institutional investors,value-based institutional investors can effectively suppress excessive investment in state-owned enterprises.(3)Compared with transactional institutional investors,value institutional investors can effectively play a negative adjustment role in the relationship between managerial overconfidence and over-investment of state-owned enterprises.Finally,the corresponding policy recommendations are put forward for the conclusions drawn in this paper,hoping to provide some reference for alleviating the problem of over-investment of state-owned enterprises.