Research On The Impact Of Manager Overconfidence On Enterprise Performance

Enterprise performance has always been the focus of academic and physical circles.Previous research on enterprise performance was mostly based on the "rational person hypothesis" of traditional economics.With the rise of behavioral finance,overconfidence has been gradually introduced into the study of corporate performance by many scholars.Over-confident managers tend to underestimate risks and overestimate returns,make irrational decisions,leading to a decline in corporate performance.As an important mechanism of internal and external governance,internal control and institutional investors can restrain managers’ overconfidence to some extent and help them make rational decisions.Based on this,this article takes A-share listed companies in Shanghai and Shenzhen from 2010 to 2021 as samples and uses empirical analysis to test the impact of manager overconfidence on corporate performance,as well as the moderating effect of internal control and institutional investor shareholding.On this basis,a comparative analysis method is used to divide institutional investors into pressure resistant institutional investors and pressure sensitive institutional investors,and to test the differences in their regulatory effects.The results show that:(1)Managers’ overconfidence has a negative impact on corporate performance,which is still significant after considering endogenous issues.(2)Internal control can weaken the negative impact of managers’ overconfidence on corporate performance.(3)Institutional investor ownership can weaken the negative impact of managers’ overconfidence on corporate performance.(4)Stress-resistant institutional investors can weaken the negative impact of managers’ overconfidence on enterprise performance,while pressure-sensitive institutional investors cannot weaken the negative impact of managers’ overconfidence on enterprise performance.The research conclusion of this article provides theoretical reference and relevant suggestions for enterprises to suppress managers’ overconfidence and improve performance levels.