The Impact Of Managerial Overconfidence And Innovation Investment On Enterprise Performance

In the background of China comprehensively deepening reform and opening up and adhering to innovation-driven development,the core position of innovation in the overall modernization drive cannot be shaken.For countries or enterprises,it is very important to improve innovation ability,especially the GEM listed enterprises,innovation ability is the basics for enterprises to survive and develop.There are many studies on the impact of innovation investment on enterprise performance,with different conclusions,and most of them are based on the assumption that managers are rational people.With the deepening of relevant research,the rational economic man hypothesis is constantly challenged,scholars propose that people are not completely rational,and introduce the content of psychology into the research,resulting in behavioral finance.Due to their own ability and special status,managers are more likely to exhibit the psychological bias of overconfidence,their own psychological characteristics will directly affect the business decision of enterprise.The upper echelons theory proposed by Hambrick,based on "characteristics-behavior-consequences" research,believes that manager traits affect their decisions and then affect the enterprise.Managers’ overconfidence may affect their decision-making on innovation,which may affect the role of innovation investment on enterprise performance.Therefore,this thesis introduces managerial overconfidence into the relationship between innovation investment and enterprise performance.First,the thesis summarizes the relevant literature of managerial overconfidence,innovation investment and enterprise performance,and elaborate on the relevant concepts and theories.Then,the data of GEM listed companies from 2016-2020 were selected for empirical analysis.The results show that:(1)Managerial overconfidence is negative related with enterprise performance.(2)The innovation investment in the current period,lagging one phase and two phases is positive related with the enterprise performance.(3)Managerial overconfidence negatively adjust the relationship between the current,lagging first and second phase of innovation investment and enterprise performance.Finally,according to the empirical results,relevant suggestions are put forward from the government and enterprise respectively,the government should encourage enterprise to innovate and protect enterprise’s innovative product;enterprises should increase innovation,pay attention to the psychological factors of managerial overconfidence in personnel selection,and establish a restraint mechanism.The thesisi analyzes the influence of different innovation inputs on enterprise performance and its lag.It enriches the research of the relationship between innovation investment and enterprise performance,which is conducive to enterprises to formulate reasonable innovation investment plans.From the perspective of behavioral finance and based on the assumption of "limited rationality",the influence of managerial overconfidence on enterprise performance and the relationship between innovation investment and enterprise performance under the influence of managerial overconfidence are tested.It further expands the research content of managerial overconfidence,which is conducive to enterprises to formulate the manager selection mechanism and rationally view the irrational behavior of managers.