“One person’s decision” or “collective voting”: Evidence of overconfident investing in Chinese listed companies

Chao Liang, Bai Liu and Yin-Che Weng

The North American Journal of Economics and Finance, 2021, vol. 57, issue C

Abstract: This study explores the collective voting of Chinese listed companies by examining whether the overconfidence of the board chairperson could affect the relationship between overconfidence and investment–cash flow sensitivity by the board of directors. On average, the board of directors’ overconfidence leads to increased investment–cash flow sensitivity. However, this influence is driven by state-controlled listed companies only if the chairperson is overconfident. The results suggest that the chairperson’s overconfidence may impact the relationship between the board of directors’ overconfidence and investment–cash flow sensitivity. Furthermore, the investment distortion due to the board’s overconfidence behavior may be alleviated by supervising the chairperson.

Keywords: Board of directors; Overconfidence; Chairperson; Investment-cash flow sensitivity; Decision-making mechanism (search for similar items in EconPapers)
JEL-codes: D81 G15 G30 G41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:57:y:2021:i:c:s1062940821000292

DOI: 10.1016/j.najef.2021.101393

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