Manager Overconfidence and Corporate Performance

The difference in performance between listed companies is inseparable from the role of “people.” One of the most important characteristics of modern enterprises is the separation of the two rights of ownership and management rights, which leads managers to have a decisive influence on corporate behavior. The theoretical research of traditional economics is centered around the assumption of “rational man”. However, with the appearance of the last many visions in the financial market, scholars began to express doubts about rational economic people. Overconfidence is the most stable and significant feature of the manager. This paper defines the manager's overconfidence by the earnings forecast bias method, and uses the OLS model to empirically test the impact of managerial overconfidence on company performance. Taking into account China's special economic background, this paper groups the nature of property rights and conducts group regression. The empirical results show that overall managerial overconfidence has a significant negative effect on company performance. This utility is still significant in private holding companies, but not significant in state-owned holding companies.