Analysis of the influence of enterprise managers’ overconfidence on the overinvestment behavior of listed companies under the media reports

Abstract

At present, there is a common overinvestment behavior among listed companies in various countries, which seriously reduces the overall resource allocation efficiency of the market. With the rise of behavioral finance, it has become a new direction to study the influence of managers’ “irrational characteristics” on enterprise overinvestment. With the rapid rise of the media industry, media reporting, as an external governance mechanism, supplements the capital market supervision system and has a huge impact on the investment behavior of enterprises. How media reports affects overinvestment and whether it can curb overinvestment caused by managers’ overconfidence is still worthy of further study. This paper took 6,012 A-share listed companies from 2013 to 2021 as samples, and based on the perspective of “media reports,” studies the impact of managers’ overconfidence on overinvestment; explores whether positive and negative media reports have a moderating effect between overconfidence and overinvestment; studies the moderating effect of media reports under different marketization processes. Empirical conclusions: (1) Managers’ overconfidence will lead to overinvestment of enterprises. (2) Positive media reports will aggravate the overinvestment caused by managers’ overconfidence; negative reports can inhibit the overinvestment caused by managers’ overconfidence. (3) In regions with higher marketization, positive media reports play a more significant role in aggravating overconfidence and leading to overinvestment; in regions with lower marketization, negative reports play a stronger role in restraining overconfidence and overinvestment.

Government innovation subsidy, executives’ academic capital and innovation quality: Evidence from pharmaceutical companies in China

“…In order to control as much as possible for each contributing element of firm innovation quality and to prevent endogeneity difficulties caused by neglecting essential factors. The control variables include ROE (return of equity), RevenueG (growth of revenue), Lev (ratio of total debt to total assets), TATO (turnout of total assests), Days (Cash operating cycle) Finally, a year dummy (Year) is introduced in the regression model( Czarnitzki and Hussinger, 2004 ; Kaul, 2011 ; So, 2022 ).…”

The Nexus between Managerial Overconfidence, Corporate Innovation, and Institutional Effectiveness

“…Similarly, studies also suggest that innovation plays a significant role in the survival of any company [4][5][6], and its competitive advantage [7] contributes positively to the firm's value [8][9][10] and stock returns [11]. Furthermore, famous business experts suggest that top managers contribute primarily to formulating a practical innovation framework [12][13][14]. However, some other experts have highlighted that a firm's internal environment and corporate culture are essential for an innovation-induced work environment [15,16].…”