A Study on the Influence of Management Overconfidence on Company's Illegal Behavior
HU Haifeng1, BAI Zonghang1, WANG Aiping2
1. Business School, Beijing Normal University, Beijing, 100875, China; 2. School of Economics, Beijing Technology and Business University, Beijing, 100048, China
Abstract In recent years, China's listed companies have frequently violated rules, disrupting the healthy operation of the capital market. This paper takes A-share listed companies in Shanghai and Shenzhen from 2004 to 2019 as the research samples to explore the impact of management overconfidence on corporate violations. The study shows that management overconfidence will increase the possibility of corporate irregularities. And it is still significant after considering endogenous problems and robustness test. By distinguishing the types of violations, it is found that management overconfidence will cause the occurrence of information disclosure violations and operation violations. In terms of influence mechanism, management overconfidence urges enterprises to choose aggressive strategies and improve the level of enterprise risk-taking, which leads to the occurrence of corporate violations. Further study indicates that the improvement of external audit and equity balance, especially the increase of the shareholding ratio of institutional investors, will effectively alleviate corporate violations caused by management overconfidence. This study discusses the impact and mechanism of management overconfidence on corporate violations, provides a new regulatory perspective and empirical evidence for shareholders and regulators, and also has a certain reference value for improving the quality of Listed Companies in China.
HU Haifeng,BAI Zonghang,WANG Aiping. A Study on the Influence of Management Overconfidence on Company's Illegal Behavior. Economic Survey, 2022, 39(5): 089.
2022, Vol. 39 
