IJSSH 2017 Vol.7(2): 109-114 ISSN: 2010-3646
doi: 10.18178/ijssh.2017.V7.804

The Impact of Managers Overconfidence on Corporate Investment

Xiao Longjie and Zhou Anfeng
Abstract—In recent years, the phenomenon of inefficient investment of listing Corporation in our country is serious. Excessive investment behavior is one of the important reasons that lead to ineffective investment. Under the influence of behavioral finance, the research of corporate finance begins to pay attention to the influence of managers over confidence on the investment behavior of enterprises. For a long time, an empirical study on the relationship between managerial over confidence and firm investment behavior has been lagging behind the development of the theory. This paper takes the A shares of non financial listing Corporation from 2009 to 2011 as the research sample. The relationship between managerial over confidence and over investment of enterprise is studied by using the deviation of enterprise profit forecasting as an alternative variable of manager's over confidence. Based on the expected investment model to estimate the enterprise over investment spending. The following conclusions are obtained through empirical research: Investor over confidence and listing Corporation over investment level is positive correlation.

Index Terms—Overconfidence, over-investment, behavioral finance.

The authors are with Nanjing University of Aeronautics & Astronautics, China (e-mail: xiaolj007@nuaa.edu.cn, zaf@nuaa.edu.cn).

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Cite: Xiao Longjie and Zhou Anfeng, "The Impact of Managers Overconfidence on Corporate Investment," International Journal of Social Science and Humanity vol. 7, no. 2, pp. 109-114, 2017.

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