Top Executives’ Overconfidence and Investment Efficiency Based on Data Analysis by Regression Method and CSMAR: Evidence from China

Abstract

This paper studies the impact of management's overconfidence on corporate investment and decision-making. Using the China A-share listed companies and the data from the CSMAR database, applying the regression method to estimate the investment efficiency of the enterprises, this research studies the quantitative relationship between the executive overconfidence and the panel data model and packet regression. This paper finds that management overconfidence is positively associated with an inefficient corporate investment. Strictly controlling the confidence level of enterprise management and strengthening supervision are important measures to ensure the good operation of enterprises, reduce operational risks and achieve sustainable development.