Research On The Effects Of Management Overconfidence And Institutional Investor Shareholding On Performance Commitment Risk

In recent years mergers and acquisitions have developed rapidly in the domestic market and the competition for M&A scale has intensified,especially in 2014-2016,enterprise mergers and acquisitions reached a peak.According to China News Network,the failure rate of domestic M&A is as high as 80%.Performance commitment aims to reduce the risk of M&A failure.As company executives,their M&A decisions are affected by psychological bias,this affects the healthy development of the contents,the mechanism of this effect is consistent with the theory of behavioral finance that "cognitive bias of psychological activities on their own abilities will affect their related behaviors " Theory.As an important leader in corporate activities,the level of cognitive bias in overconfidence will be greater,and it is more likely to overestimate its own ability,underestimate operational risk,and increase the risk of failure of performance commitment.In addition,experiments have proved that institutional investment shareholding can adjust the negative correlation between overconfidence of corporate management and performance commitment risk.Institutional investors,as an important market participant,have strong professionalism and regulation The excellent team and the right to participate in corporate governance can,to a certain extent,curb the risk of performance commitment caused by overconfidence of the management.Therefore,this thesis discusses the relationship between overconfidence and productivity investment.institutional investor shareholding and performance commitment risk,examines the effect of institutional investors with different independence on the outward governance of enterprises,and seeks the impact factors of payment methods on performance commitment,so to improve the efficacy of leadership,to reduce the risk of performance and protect market stability.On the basis of reviewing the relevant literature on the relationship between the management’s behavior and performance commitment risk,its contribution is the theme of research on listed companies during the commitment period of incorporates and achieves from 2013 to 2021,and combines the theory of behavioral finance to construct an analysis framework of the management’s overconfidence and performance commitment risk.The research finds that:(1)the overconfidence of the management will promote the performance commitment risk,and this effect is more obvious in the enterprises that spend in cash;(2)Institutional investors can restrain the risk of performance commitment caused by overconfidence of the management,and the degree of influence of institutional investors with different independence is different;(3)Compared with state-owned enterprises,the management’s excessive trust in state-owned enterprises contributes to the risk of operational responsibility to a large extent.Finally,from the perspective of stock exchange management and external government supervision,we propose to take measures to optimise the management training system,standardise the market environment and establishment of efficient capital markets to protect the interests of small and medium-sized shareholders.