The Empirical Study of the Impact on Managerial Overconfidence 、 Diversification Strategy for Firm Performance
|Keywords||managerial overconfidence diversification strategy investment efficiency firm performance|
In recent years, diversification and firm performance relationship between the theorists have been the focus of research. However, the acres of the former did not reach a unified conclusion , many problems still remain differences, such as corporate diversification effect in the end is played, or premium discount effect? Why are some companies out of business diversification to create the myth, while some companies are therefore in trouble, or even go bankrupt?This paper reviews the performance of the company’s diversification strategy and the related theory, based on this theory, respectively, sums up the domestic and foreign academic performance of the company on diversity and the relationship between the empirical research undertaken. Then, the article describes the results of the estimation method and a wide range of measurement methods, and research method choice. This collection of listed companies in 2003-2008 by the financial data, empirical research, and concluded that listed companies have chosen to identify the current diversification of the company performance.Managers of different companies have different level of confidence which, in turn determines the degree of diversification in different behavior. In this paper,“the top three highest paid executive remuneration / remuneration of all executives”the as a measure of“over-confidence”of managers.The results show that: the higher the degree of overconfidence management company, the more likely the diversification strategy or to a greater degree of diversification. the more the degree of diversification large, managers, and the greater the degree of overconfidence overconfident managers diversified operating company, the greater the degree of over-investment. harm the company to diversify the company’s profitability, reducing the market’s valuation of the company’s markets, and literature has been consistent; the same time, company diversification effect on firm performance consistent with the literature on corporate diversification motive for research, for which the company reduce business risk and improve the solvency and reduce the tax considerations carried out diversification.