Empirical study on managerial overconfidence and corporate investment decisions—Based on the differences of manager´s level

With the development of research on behavioral corporate finance, the irrational behaviors of decision makers have received more attention from scholars around the world. Managerial overconfidence is recognized as an important factor accounting for financial decisions. This paper classifies mangers into three levels, including chairman, CEO and TMT. Through exploring the effect of managerial overconfidence on corporate investment decision for different levels of managers, we find out that the overconfidence of chairman and CEO has a significant effect on investment level and merger decisions, while the overconfidence of TMT only affects investment level and investment cash flow sensitivity. This paper approves the effect of managerial overconfidence vary in different manager levels, thus provides an empirical evidence to regulate managers´ irrational behaviors.