Career Experiences, Managerial Overconfidence and Investment Efficiency: A Natural Experiment from Chinese CEO Growth Path

Social Ties, Managerial Overconfidence, and Investment Efficiency

Finance Research Letters ◽

10.1016/j.frl.2021.102300 ◽

2021 ◽

pp. 102300

Author(s):

Yong Joo Kang ◽

Ho-Young Lee ◽

Hyun-Young Park ◽

Ju Hyoung Park

Keyword(s):

Social Ties ◽

Investment Efficiency ◽

Managerial Overconfidence

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Evaluation of Managerial Overconfidence, Cash Holding, and Investment Efficiency in Companies

Journal of Mathematics ◽

10.1155/2021/1954526 ◽

2021 ◽

Vol 2021 ◽

pp. 1-11

Author(s):

Abdorreza Asadia ◽

Maryam Oladia ◽

Mohammad Ghasem Aghela

Keyword(s):

Fixed Effects ◽

Stock Exchange ◽

Financial Statements ◽

Investment Efficiency ◽

Cash Holding ◽

Data Set ◽

Listed Firms ◽

Managerial Overconfidence ◽

Moderating Role

Managers’ overconfidence leads to overestimating their ability to manage cash sources. Holding more cash may result in overinvestment in projects and investment inefficiency consequently. The present study aims to investigate the effect of cash holding on investment efficiency with the moderating role of managerial overconfidence in Iranian companies. All listed firms in Tehran Stock Exchange, excluding banks, insurance, pension funds, and financial intermediaries, are included in the research. We have used data from financial statements of 91 companies over the period from 2010 to 2018 and conducted multiple regression models to test the hypotheses based on pooled and panel data set with fixed effects. The results indicate a positive relationship between managerial overconfidence and cash holding. The effect of cash holding on investment efficiency turns out to be significantly negative. Furthermore, managerial overconfidence has a significant moderating effect on the relation of the variables. This study is almost the first one, which has been done in emerging markets, so the study’s findings not only contribute to the existing literature on managerial overconfidence and investment efficiency but also assist policymakers, managers, and investors in making effective decisions.

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HOW FAR FISCAL DOMINANCE MATTERS FOR A DEVELOPING ECONOMY

Financial and credit activity problems of theory and practice ◽

10.18371/fcaptp.v3i38.237449 ◽

2021 ◽

Vol 3 (38) ◽

pp. 214-221

Author(s):

S. Shvets

Keyword(s):

Public Debt ◽

Public Investment ◽

Sustainable Growth ◽

Investment Efficiency ◽

Developing Economy ◽

Growth Path ◽

Fiscal Multiplier ◽

The Public ◽

Fiscal Dominance ◽

Effective Policy

Abstract. The growing public debt that intensifies with a frequency of economic crises grasps a high rating in the current economic debates. There is an urgent need for implementing an effective policy regime targeted at handling the public debt problem. The fiscal dominance policy, usually practiced to ensure strong recovery and growth, has a strict guideline for identifying a degree of fiscal expansion and monetary accommodation. Given a dilemma between growth and debt burden, the government should mobilize the most effective policy instrument targeted at the highest fiscal multiplier and does not cross a debt-to-GDP threshold ratio. Following an effective practice of fiscal management, this instrument is associated with public investment. The paper aims to assess the magnitude of the public investment multiplier by following a stable growth path limited by a prescribed debt limitation for a developing economy. To achieve the goal, we use an elaborated New Keynesian model, which besides an active fiscal and monetary stances, also includes a high share of non-Ricardian households, the separability in preferences between private and government consumption, a low level of public investment efficiency, and the substantiated degree of nominal and real rigidities. The obtained present value cumulative output multiplier for public investment grasps the point 2.0 in maximum over two years of the impulse response function. The multiplier effect proves to be high enough to offset temporary public debt growth and maintain a sustainable growth path over the long run. The verified measure of fiscal dominance contradicts an active monetary stance and, among other things, has to be counterbalanced by an appropriate efficiency and productivity of public investment and degree of price stickiness. Keywords: fiscal policy, monetary policy, fiscal-monetary interaction, fiscal dominance, fiscal multiplier, DSGE modeling. JEL Classification O47, E63, H63, D58 Formulas: 1; fig.: 2; tabl.: 0; bibl.: 21.

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Green Credit, Debt Maturity, and Corporate Investment—Evidence from China

Sustainability ◽

10.3390/su11030583 ◽

2019 ◽

Vol 11 (3) ◽

pp. 583 ◽

Cited By ~ 2

Author(s):

Enxian Wang ◽

Xinghe Liu ◽

Jiapeng Wu ◽

Danting Cai

Keyword(s):

Natural Experiment ◽

Debt Maturity ◽

Political Connections ◽

Investment Efficiency ◽

Credit Policy ◽

Difference In Differences ◽

Dependency Relationship ◽

Maturity Structure ◽

Relationship Of

Against the backdrop of working hard to build a beautiful country, this paper uses the promulgation of the “Green Credit Guidelines” policy in China as a quasi-natural experiment. Based on a difference-in-differences (DID) model, the results show that, since the promulgation of the Green Credit Guidelines policy, financial institutions have significantly reduced the proportion of long-term debt to heavily polluting enterprises for reasons such as risk aversion and total credit constraints. Due to capital constraints and the restrictive terms of credit approval, the Green Credit Guidelines policy reduces the investment scale and overinvestment of heavily polluting enterprises. The dependency relationship of the debt maturity structure of heavily polluting enterprises with the investment scale and investment efficiency has been reduced. Furthermore, the negative net effect of the Green Credit Guidelines policy on long-term debt is more pronounced in heavily polluting enterprises that lack political connections. However, the promulgation of this policy inhibits the investment scale and the investment efficiency of heavily polluting enterprises (with or without political connections). To a certain extent, these results confirm the “supportive hand” perspective towards political connections. The results of this research could help relevant government departments to understand the microeconomic consequences of the Green Credit Guidelines policy and could help improve and perfect China’s green credit policy.

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Green Credit, Financial Ecological Environment, and Investment Efficiency

Complexity ◽

10.1155/2021/5539195 ◽

2021 ◽

Vol 2021 ◽

pp. 1-14

Author(s):

Meng Qi

Keyword(s):

Empirical Evidence ◽

Natural Experiment ◽

Listed Companies ◽

Green Economy ◽

Ecological Environment ◽

Investment Efficiency ◽

Financial Leverage ◽

Beneficial Effects ◽

The Impact ◽

The Relationship

This article uses the “Green Credit Guidelines” issued in 2012 as a quasi-natural experiment, using the statistics of A-share listed companies from 2008 to 2017, using the PSM-DID model to examine the effect and mechanism of green credit policies on the investment efficiency of heavily polluting companies, and taking into consideration the heterogeneous influence of the financial ecological environment on the relationship between the two. The research indicates that, after the Green Credit Guidelines were promulgated, the investment efficiency of heavy-polluting companies has been slightly improved compared with non-heavy-polluting companies and that the impact is more obvious in regions with better financial ecological environment. The research conclusions confirm the beneficial effects of the Green Credit Guidelines policy on the prudent investment of companies that cause serious pollution to the environment and improve investment efficiency, a provision of empirical evidence for financial leverage to drive the green economy transformation.

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THE ROLE OF INTERNAL FINANCING IN MEDIATING THE EFFECT OF MANAGERIAL OVERCONFIDENCE AND CORPORATE GOVERNANCE TOWARDS INVESTMENT EFFICIENCY

10.31235/osf.io/x7q6c ◽

2021 ◽

Author(s):

Riski Amalia Madi ◽

Hamrini Mutia ◽

Enny Wati ◽

sujono

Keyword(s):

Corporate Governance ◽

Stock Exchange ◽

Sampling Technique ◽

Investment Efficiency ◽

Panel Data Regression ◽

Internal Financing ◽

Corporate Funding ◽

Owned Company ◽

Managerial Overconfidence

This study aims to examine empirically the factors that influence investment efficiency in State-Owned Enterprises on the Indonesia Stock Exchange. This study was tested with two independent variables are managerial overconfidence and corporate governance, intervening variable is internal financing. The object of this research is the state-owned company for the period 2011-2018. 10 companies as the sample using purposive sampling technique. The analysis used in this research is panel data regression analysis. The results of this study found that investment efficiency in state-owned enterprises in Indonesia is largely determined by managerial overconfidence bias. Managers who have an overconfidence seek more aggressive and risky ventures so that they invest excessively beyond optimal levels. Managerial overconfidence in a manager can also strengthen the choice of internal financing, especially in state-owned companies. However, investment efficiency in this study is not influenced by corporate governance and internal financing. Corporate governance has also proven to have no role in corporate funding decisions. The role of internal financing as mediation was not found in this study.

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