Research on Overconfident Managers and The Long-term abnormal Returns Following Capital Expenditures

• Main Authors: Wen-Neng Cheng, 鄭文能
• Other Authors: Po-Hsin Ho
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/55328214161533929257

碩士 === 國立聯合大學 === 管理碩士學位學程 === 101 === Managers have the power to determine the capital expenditure decisions. If managers who can carefully evaluate the capital expenditure decisions, it will be benefit to firm’s growth and operation. However, past research indicates that firm’s stock performance is negatively related to abnormal capital expenditure due to the empire manager’s building or self-interest behavior. Recent studies find that managers who are overconfident will tend to overestimate future cash flow and result in over investment. This study investigates whether the capital expenditure decision are difference between different type of managers. Our research finds that overconfident managers tend to have more abnormal capital expenditure than moderate- and low-confident managers, especially firms with high cash flow. Moreover, overconfident managers get poor stock return after abnormal capital expenditure then moderate- and low-confident. Firms with overconfident managers but high growth opportunity would mitigate this negative stock return.