Managerial Overconfidence And Enterprise R&D Investment

Enterprise innovation has always been an important strategy in China.In the study of the influencing factors of enterprise innovation,most scholars start from a rational perspective,and a few literatures from an irrational perspective mainly use traditional methods to measure irrational characteristic variables.This paper uses the text of the discussion and analysis chapter of financial report managers of listed companies in China from 2008 to 2021,and uses text analysis to measure managers ’overconfidence.From the perspective of irrational people,this paper empirically studies the impact of managers’ overconfidence on corporate innovation behavior,and examines the regulatory role of free cash flow level and corporate governance level in the relationship between the two.This paper first conducts an empirical test on the impact of managerial overconfidence on corporate R&D investment,and draws the following conclusions:(1)There is a positive correlation between managerial overconfidence and corporate R&D investment.(2)Free cash flow can positively regulate the positive correlation between executive overconfidence and R&D investment.(3)The level of corporate governance will inhibit the positive correlation between managerial overconfidence and corporate R&D investment.Subsequently,this paper conducts further research using the enterprise R&D efficiency constructed by the number of patents and R&D investment as the dependent variable,and finds that:(4)Managerial overconfidence has a positive impact on corporate R&D efficiency.(5)The level of free cash flow can still positively regulate the positive effect of managerial overconfidence.(6)The level of corporate governance does not play a regulatory role in the process of managerial overconfidence affecting R&D efficiency.Due to the change of the regulatory role of corporate governance level under different test mechanisms,this paper studies the regulatory role of the three dimensions of corporate governance level-board governance,management shareholding and shareholder shareholding in the process of managers’ overconfidence and corporate R&D investment.The results show that:(7)Board governance plays a positive role in the process of managers ’ overconfidence positively affecting R&D investment.(8)Managerial ownership itself has a positive effect on corporate R&D investment,but it will negatively regulate the positive impact of managerial overconfidence.(9)Shareholder ownership itself has a positive effect on corporate R&D investment,but it will negatively regulate the positive impact of managerial overconfidence.Finally,based on the above research conclusions,this paper suggests that enterprises should face up to and make full use of the positive impact of managers ’ overconfidence and the moderating effects of free cash flow level and board governance,managers’ shareholding and shareholders ’ shareholding in different directions.At the same time,it also reminds enterprises to pay attention to other impacts on enterprises when using free cash flow level and corporate governance level to regulate the impact of managers’ overconfidence.