Whether it is economics, finance, or management, it has been or is integrating psychology into interdisciplinary exploration. Overconfidence, as one of the most robust findings in psychology, is widely used in the manager’s decision-making process. Existing managerial overconfidence research, however, has a lot of limitations, such as unclear definitions, irrespective types, inexact measurements, and unknown antecedents, which will seriously affect the consistency and universality of the research conclusion. Based on the systematic review of managerial overconfidence literature of behavioral finance, strategic management and financial accounting field, we try to provid a panorama of existing managerial overconfidence research. Firstly, through concept tracing and similar concept differentiation, we have formed a precise definition of managerial overconfidence. On this basis, three types of managerial overconfidence(overestimation, overprecision and overplacement)and their relationships are discussed. Secondly, we summarize the measurement methods of managerial overconfidence in existing studies, including the reflective method, constructive method, procedural method and other methods. Furthermore, the advantages and disadvantages of each measurement method are discussed, and suggestions are given for the measurement method of managerial overconfidence based on the Chinese context. Thirdly, it explores the factors that influence the managerial overconfidence at the individual level, the organizational level and the environmental level, as well as the five corporate behaviors(merger and acquisition, investment and financing, diversification, innovation and corporate social responsibility)influenced by managerial overconfidence and the mechanism behind them. On this basis, this paper also discusses the moderating factors affecting the relationship between managerial overconfidence and corporate behaviors. Finally, this paper constructs an integrated framework of managerial overconfidence research and puts forward future research directions.
/ Journals / Foreign Economics & Management
Foreign Economics & Management
LiZengquan, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YinHuifang HeXiaogang LiuJianguo, Vice Editor-in-Chief
Managerial Overconfidence: A Literature Review and Prospects
Foreign Economics & Management Vol. 41, Issue 02, pp. 17 - 29 (2019) DOI:10.16538/j.cnki.fem.2019.02.002
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Cite this article
Zhang Ming, Lan Hailin, Zeng Ping. Managerial Overconfidence: A Literature Review and Prospects[J]. Foreign Economics & Management, 2019, 41(2): 17-29.
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