Can Managerial Psychology Affect Investment Efficiency?
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摘要
This paper explores the impact of varying levels of CEO overconfidence on investment efficiency, focusing on overinvestment and underinvestment. Using a sample of 3,900 firm-year observations from 2012 to 2023, the study employs the Generalized Method of Moments (GMM) regression to examine the relationship between managerial overconfidence and investment efficiency. The findings suggest that increasing low levels of overconfidence in CEOs helps firms move closer to optimal investment efficiency by reducing underinvestment. However, firms that are over-invested and have CEOs with low overconfidence do not experience significant improvements in investment efficiency. This research contributes to the literature by refining measures of overconfidence to differentiate between low and high levels, offering valuable insights for academics, practitioners, and regulators focused on enhancing investment efficiency.
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