All Title Author
Keywords Abstract

Research on the Relationship between Managerial Overconfidence and Corporate R & D Investment in the Context of Financing Constraints

DOI: 10.4236/ojbm.2017.51003, PP. 22-33

Keywords: Financing Constraints, Managerial Overconfidence, Corporate R & D Investment, Ownership Type

Full-Text   Cite this paper   Add to My Lib


Using the data of Chinese listed companies from 2012 to 2014, this paper empirically tests the relationship between managerial overconfidence and corporate R & D investment in the context of financing constraints by the method of multiple regression analysis, and further tests the impact of ownership type on the relationship. We find that: 1) Compared with the companies with weak financing constraints, the positive relationship between managerial overconfidence and corporate R & D investment in the companies with strong financing constraints is stronger; 2) In the context of strong financing constraints, compared with the state-owned companies, the positive relationship between managerial overconfidence and corporate R & D investment in the non-state-owned companies is stronger.


[1]  Galasso, A. and Simcoe, T.S. (2011) CEO Overconfidence and Innovation. Management Science, 57, 1469-1484.
[2]  Hirshleifer, D., Low, A. and Teoh, S.H. (2012) Are Overconfident CEOs Better Innovators? The Journal of Finance, 67, 1457-1498.
[3]  Fairchild, R.J. (2005) The Effect of Managerial Overconfidence, Asymmetric Information, and Moral Hazard on Capital Structure Decisions.
[4]  Gervais, S., Heaton, J.B. and Odean, T. (2011) Overconfidence, Compensation Contracts, and Capital Budgeting. The Journal of Finance, 66, 1735-1777.
[5]  Taylor, S.E. and Brown, J.D. (1988) Illusion and Well-Being: A Social Psychological Perspective on Mental Health. Psychological Bulletin, 103, 193-210.
[6]  Camerer, C. and Lovallo, D. (1999) Overconfidence and Excess Entry: An Experimental Approach. American Economic Review, 89, 306-318.
[7]  Pinfold, J.F. (2001) The Expectations of New Business Founders: The New Zealand Case. Journal of Small Business Management, 39, 279-285.
[8]  Forbes, D.P. (2005) Are Some Entrepreneurs More Overconfident Than Others? Journal of Business Venturing, 20, 623-640.
[9]  Knight, F.H. (1921) Risk, Uncertainty and Profit. Houghton Mifflin Company, Boston, 682-690.
[10]  Griffin, D. and Tversky, A. (1992) The Weighing of Evidence and the Determinants of Confidence. Cognitive Psychology, 24, 411-435.
[11]  Hao, Y., Liu, X. and Lin, C.N. (2005) An Empirical Research on the General Manager Overconfidence and Investment Decision for the Listed Companies. Chinese Journal of Management Science, 13, 142-148.
[12]  Ye, B. and Yuan, J.G. (2008) Managerial Confidence, Corporate Investment and Firm Value: Evidence from Chinese Listed Companies. China Soft Science, No. 2, 97-108.
[13]  Zhang, R.W. and Liu, W.X. (2008) An Empirical Study on Managerial Overconfidence and Earnings Management. The Theory and Practice of Finance and Economics, 29, 72-77.
[14]  Hadlock, C.J. and Pierce, J.R. (2010) New Evidence on Measuring Financial Constraints: Moving beyond the KZ Index. Review of Financial Studies, 23, 1909-1940.
[15]  Chang, X., Fu, K., Low, A., et al. (2015) Non-Executive Employee Stock Options and Corporate Innovation. Journal of Financial Economics, 115, 168-188.
[16]  Ayyagari, M., Demirguc-Kunt, A. and Maksimovic, V. (2011) Firm Innovation in Emerging Markets: The Role of Finance, Governance, and Competition. Journal of Financial & Quantitative Analysis, 46, 1545-1580.


comments powered by Disqus

Contact Us


微信:OALib Journal