Research on the Relationship between Managerial Overconfidence and Corporate R & D Investment in the Context of Financing Constraints
, PP. 22-33 10.4236/ojbm.2017.51003
Keywords: Financing Constraints, Managerial Overconfidence, Corporate R & D Investment, Ownership Type
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. https://doi.org/10.1287/mnsc.1110.1374
[ 2] Hirshleifer, D., Low, A. and Teoh, S.H. (2012) Are Overconfident CEOs Better Innovators? The Journal of Finance, 67, 1457-1498. https://doi.org/10.1111/j.1540-6261.2012.01753.x
[ 3] Fairchild, R.J. (2005) The Effect of Managerial Overconfidence, Asymmetric Information, and Moral Hazard on Capital Structure Decisions. https://doi.org/10.2139/ssrn.711845
[ 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. https://doi.org/10.1257/aer.89.1.306
[ 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. https://doi.org/10.1016/j.jbusvent.2004.05.001
[ 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. https://doi.org/10.1017/S0022109011000378
comments powered by Disqus. comments powered by
Contact Us email@example.com