Research On The Influence Of Top Management Team’s Overconfidence On Enterprise Performance

With the acceleration of economic globalization,the impact on enterprises continues to intensify.The increasingly complex internal and external environment makes enterprises must continuously enhance their strength in order to maintain an advantage in the fierce market competition.Executives control most of the resources of enterprises and have an important voice in daily management decisions.They make development strategies for enterprises,coordinate and deal with internal and external conflicts of interest,intervene in external information release,and make investment and financing strategic decisions.Therefore,the daily behavior,background characteristics and professional quality of top management team determine the daily operation of the enterprise and play a vital role in the enterprise.Due to the excessive concentration of power,top management team is likely to appear the tendency of overconfidence,and more likely to produce overconfidence than ordinary managers.This feature is closely related to the daily decision-making,investment choices,and business activities of enterprises,and thus has a profound impact on the performance of enterprises.How to determine whether there is overconfidence in the top management team and the mechanism of the overconfidence in the top management team on enterprise performance have attracted the attention of scholars both in China and abroad.Through the research on the overconfidence in the top management team,it is the common pursuit of scholars to find the factors that affect the overconfidence in the top management team and thus improve enterprise performance.In view of this,this paper,based on the higher echelon theory,information asymmetry theory and other related theories,makes a research and analysis on whether the senior management team has overconfidence.Taking the related data of China’s Shanghai and Shenzhen A-share listed enterprises from 2011 to 2021 as the research sample,it tests the mechanism of the top management team’s overconfidence on enterprise performance,the relationship between the top management team’s overconfidence and enterprise innovation investment,the impact of enterprise innovation investment on enterprise performance,and examines the intermediary role of enterprise innovation investment and the regulatory role of managerial entrenchment.The results show that: First,TMT overconfidence has a positive promoting effect on enterprise performance;Second,TMT overconfidence has a positive promoting effect on enterprise innovation investment;Third,enterprise innovation investment has a positive promoting effect on enterprise performance.Fourthly,corporate innovation investment mediates the relationship between TMT overconfidence and corporate performance.Fifth,managerial entrenchment has a significant negative moderating effect between TMT overconfidence and corporate innovation investment.That is,the higher the degree of managerial entrenchment is,the smaller the promoting effect of TMT overconfidence on corporate innovation investment.This article has carried on the analysis and the research to the top management team overconfidence to the enterprise performance influence,the research conclusion has the certain theory significance and the practice significance.First,the results of this study enrich the existing research on the impact of TMT overconfidence on corporate performance.Second,the results provide a reference for enterprises to scientifically understand the regulatory role of managerial entrenchment behavior,and help to provide a theoretical basis for improving enterprise innovation investment and thus improve enterprise performance.At the same time,it provides policy recommendations for enterprises to select members of the top management team,optimize the structure of the top management team,build a suitable top management team,and improve corporate performance.