Green technological innovation is crucial for the manufacturing industry’s green transformation and sustainable development.This study examines the impact of executive overconfidence on corporate green innovation,foc...Green technological innovation is crucial for the manufacturing industry’s green transformation and sustainable development.This study examines the impact of executive overconfidence on corporate green innovation,focusing on the internal drivers of corporate innovation and using a sample of Shanghai and Shenzhen A-share listed manufacturing companies from 2013 to 2020.We further examine the mediating role of digital transformation and the moderating role of external attention.The findings indicate that executive overconfidence promotes corporate green technological innovation.Overconfident executives enhance green innovation by accelerating digital transformation.Moreover,external attention from analysts and media positively moderates the relationship between executive overconfidence and corporate green innovation.Heterogeneity analysis reveals that the positive impact of executive overconfidence on green innovation is more significant in non-state-owned enterprises,high-tech firms,and enterprises with lower pollution levels.展开更多
Overconfidence behavior,one form of positive illusion,has drawn considerable attention throughout history because it is viewed as the main reason for many crises.Investors’overconfidence,which can be observed as over...Overconfidence behavior,one form of positive illusion,has drawn considerable attention throughout history because it is viewed as the main reason for many crises.Investors’overconfidence,which can be observed as overtrading following positive returns,may lead to inefficiencies in stock markets.To the best of our knowledge,this is the first study to examine the presence of investor overconfidence by employing an artificial intelligence technique and a nonlinear approach to impulse responses to analyze the impact of different return regimes on the overconfidence attitude.We examine whether investors in an emerging stock market(Borsa Istanbul)exhibit overconfidence behavior using a feed-forward,neural network,nonlinear Granger causality test and nonlinear impulseresponse functions based on local projections.These are the first applications in the relevant literature due to the novelty of these models in forecasting high-dimensional,multivariate time series.The results obtained from distinguishing between the different market regimes to analyze the responses of trading volume to return shocks contradict those in the literature,which is the key contribution of the study.The empirical findings imply that overconfidence behavior exhibits asymmetries in different return regimes and is persistent during the 20-day forecasting horizon.Overconfidence is more persistent in the low-than in the high-return regime.In the negative interest-rate period,a high-return regime induces overconfidence behavior,whereas in the positive interest-rate period,a low-return regime induces overconfidence behavior.Based on the empirical findings,investors should be aware that portfolio gains may result in losses depending on aggressive and excessive trading strategies,particularly in low-return regimes.展开更多
It is generally accepted that herding behavior and overconfidence behavior are unrelated or even mutually exclusive.However,these behaviors can both lead to some similar market anomalies,such as excessive trading volu...It is generally accepted that herding behavior and overconfidence behavior are unrelated or even mutually exclusive.However,these behaviors can both lead to some similar market anomalies,such as excessive trading volume and volatility in the stock market.Due to the limitation of traditional time series analysis,we try to study whether there exists network relevance between the investor’s herding behavior and overconfidence behavior based on the complex network method.Since the investor’s herding behavior is based on market trends and overconfidence behavior is based on past performance,we convert the time series data of market trends into a market network and the time series data of the investor’s past judgments into an investor network.Then,we update these networks as new information arrives at the market and show the weighted in-degrees of the nodes in the market network and the investor network can represent the herding degree and the confidence degree of the investor,respectively.Using stock transaction data of Microsoft,US S&P 500 stock index,and China Hushen 300 stock index,we update the two networks and find that there exists a high similarity of network topological properties and a significant correlation of node parameter sequences between the market network and the investor network.Finally,we theoretically derive and conclude that the investor’s herding degree and confidence degree are highly related to each other when there is a clear market trend.展开更多
Adaptive online platforms,powered by artificial intelligence,commonly referred to as robo-advice,steadily increase their market share.Yet these comparably new financial services are critically understudied.Little is k...Adaptive online platforms,powered by artificial intelligence,commonly referred to as robo-advice,steadily increase their market share.Yet these comparably new financial services are critically understudied.Little is known about why some investors adopt robo-advice for something as essential as asset allocation.The current paper tries to close this gap by shedding light on the causal effect of investor overconfidence on the propensity of using robo-advice.The study proposes a theoretical framework that combines the divergence of opinion hypothesis with consumer behavior insights and information technology diffusion research.The framework is empirically tested on the Investor Sample of the 2015 National Financial Capability Study,a subsample of 2000 US investors.The results from a series of generalized linear,structural,and semipara-metric models show that in a pre-chasm market,overconfident investors have a significantly higher propensity of adopting robo-advice.While higher financial literacy seems to decrease robo-advice uptake,unjustified confidence in one’s knowledge causally increases it.Willingness to take financial risk cannot account for the significantly increased adoption of robo-advice among overconfident investors.The findings help managers to better position robo-advice by offering behavioral insights into their user base.In addition,the results outline a managerial tool to take demand-side actions to increase the likelihood of an end-user innovation crossing the chasm.展开更多
This paper offers new insights into the Italian mutual fund industry. Surveying Italian professionals, we do not only reveal typical gender differences but also detect divergence to their German counterparts. While di...This paper offers new insights into the Italian mutual fund industry. Surveying Italian professionals, we do not only reveal typical gender differences but also detect divergence to their German counterparts. While disclosing Italian professionals＇ overly positive self-assessment in general, we find evidence for male overconfidence in particular--though without being accompanied by excessive control illusion of the own information level. Asset managers＇ risk taking reveals further differences： Italian female professionals do not only assess themselves as more risk averse than their male colleagues, they also prefer a more passive portfolio management compared to the level they are allowed to. Moreover, in a tournament scenario near the end of the investment period female asset managers do not try to become the ultimate top performer when they have outperformed their peer group so far. However, in case of underperformance, the risk of deviating from the benchmark makes especially female professionals willing to seize a chance of catching up. Overall, compared to their German counterparts, we find Italian asset managers to be slightly more risk averse. Matching bounded former results on Italian mutual funds, we discuss interdependencies as well as impact of our findings at the individual asset managers＇ level on trading activity, management style and performance.展开更多
The application of behavioural theory to corporate finance is now attracting the attention of theoretical work. However, very little rigorous empirical work has been carried out to analyse the desirability of behaviou...The application of behavioural theory to corporate finance is now attracting the attention of theoretical work. However, very little rigorous empirical work has been carried out to analyse the desirability of behavioural biases in relation to financing decisions. The main results argue that managerial overconfidence provides an alternative determinant of capital structure. However, many questions remain to be explored, related to overconfidence measures and positive/negative effects of managerial overconfidence. Our paper assumes that the combination of financial theory and behavioural theory leads to better explanatory power. We follow two complementary goals. Firstly, we examine the dynamic trade-off model introducing a behavioural perspective. Secondly, we propose extending the pecking order analysis to incorporate overconfidence in Shyam-Sunder and Myers＇s model. We use a sample of Tunisian firms and employ panel-data estimation procedures to account for endogeneity and spurious correlation issues. Our results confirm the assumption that manager confidence is positively related to debt level. Overconfident managers underestimate the probability of financial distress and will choose higher levels of debt than they would if they were ＂rational＂.展开更多
This paper takes the Chinese listed company with the equity refinancing qualification from 2012 to 2013 as the research object, and uses the residual revenue model to calculate the equity financing cost. This paper di...This paper takes the Chinese listed company with the equity refinancing qualification from 2012 to 2013 as the research object, and uses the residual revenue model to calculate the equity financing cost. This paper discusses the impact of the overconfidence of executives on the equity financing cost and its impact mechanism. The unique institutional background examines the differences in property rights characteristics. The research found that:(1) executive overconfidence has a negative impact on the cost of equity financing, executives tend to be overconfident, the higher the equity financing cost of the company;(2) the overconfidence of executives to state-owned enterprises compared to private enterprises The negative impact of financing costs is more significant;(3) in addition, this paper also examines the potential impact mechanism of executive overconfidence on the cost of equity financing. The quality of information disclosure and the risk of investor prediction have a mediating effect on the impact of executive overconfidence on equity financing costs.展开更多
The aim of this paper is to develop a multi-period economic model to interpret how the people become overconfident by a biased learning that people tend to attribute the success to their abilities and failures to othe...The aim of this paper is to develop a multi-period economic model to interpret how the people become overconfident by a biased learning that people tend to attribute the success to their abilities and failures to other factors.The authors suppose that the informed trader does not know the distribution of the precision of his private signal and updates his belief on the distribution of the precision of his knowledge by Bayer's rule.The informed trader can eventually recognize the value of the precision of his knowledge after an enough long time biased learning,but the value is overestimated which leads him to be overconfident.Furthermore,based on the definition on the luckier trader who succeeds the same times but has the larger variance of the knowledge,the authors find that the luckier the informed trader is,the more overconfident he will be;the smaller the biased learning factor is, the more overconfident the informed trader is.The authors also obtain a linear equilibrium which can explain some anomalies in financial markets,such as the high observed trading volume and excess volatility.展开更多
Some financial experiments find that individuals＇ risk perception in favor of shortfall measures like LPMs. This paper provides an individuals＇ risk perception model and a risk perception model with overconfidence a...Some financial experiments find that individuals＇ risk perception in favor of shortfall measures like LPMs. This paper provides an individuals＇ risk perception model and a risk perception model with overconfidence according to results of financial experiments and shows that investors＇ psychology could influence individuals＇ risk perceptions, and further, investors＇ psychology could influence investment decisions.展开更多
Due to the relatively short history of the development of the Chinese stock market,the investment philosophy and psychology of most individual investors are not particularly mature.Especially under the influence of pu...Due to the relatively short history of the development of the Chinese stock market,the investment philosophy and psychology of most individual investors are not particularly mature.Especially under the influence of public health emergencies,the individual investors’characteristic of the investment behavior in the stock market has become more obvious.This paper combines questionnaire and psychological experiments to study the factors that affect investment decisions of individual investors,and then takes COVID-19 as an example to analyze the impact of public emergencies on individual investors’investment decisions in the stock market.展开更多
This paper studies Whether the managerial overconfidence have any impact on the Cost management （Characterized by the degree of the Costs Stickiness ） .Using the ample of the A-share listed companies between 2007-20...This paper studies Whether the managerial overconfidence have any impact on the Cost management （Characterized by the degree of the Costs Stickiness ） .Using the ample of the A-share listed companies between 2007-2011 in China, We document that SG＆A cost stickiness decreases in the degree of overconfidence. The further studies show the negative relation is more significant in the state-owned listed companies,which proved our speculation that the manager will cut expenses avoiding significant decline in performance when the sales decline in the state-owned listed company.展开更多
Apparent biases in decision making by animals, including humans, seem to present an evolutionary puzzle, since one would expect decisions based on biased （unrealistic） information to be suboptimal. Although cognitiv...Apparent biases in decision making by animals, including humans, seem to present an evolutionary puzzle, since one would expect decisions based on biased （unrealistic） information to be suboptimal. Although cognitive biases are hard to diag- nose in real animals （Marshall et al., 2013b）, we investigate Trivers＇ proposal that individuals should self-deceive first in order to better deceive others （Trivers, 2011）. Although this proposal has been scrutinized extensively （Bandura et al., 2011） it has not been formally modelled. We present the first model designed to investigate Trivers＇ proposal. We introduce an extension to a re- cent model of the evolution of self-deception （Johnson and Fowler, 2011）. In the extended model individuals make decisions by taking directly into account the benefits and costs of each outcome and by choosing the course of action that can be estimated as the best with the information available. It is shown that in certain circumstances self-deceiving decision-makers are the most evolutionarily successful, even when there is no deception between these. In a further extension of this model individuals addi- tionally exhibit deception biases and Trivers＇ premise （that effective deception is less physiologically costly with the aid of self-deception） is incorporated. It is shown that under Trivers＇ hypothesis natural selection favors individuals that self-deceive as they deceive others .展开更多
We build a strategic trading model where the overconfident trader earns more than the rational trader and the mechanism for this result differs from that of Kyle and Wang(1997). In this paper, discretionary and nondis...We build a strategic trading model where the overconfident trader earns more than the rational trader and the mechanism for this result differs from that of Kyle and Wang(1997). In this paper, discretionary and nondiscretionary liquidity traders coexist. The overconfident insider is less worried by the market maker and thus induces a lower liquidity cost. In this way, he attracts all the trading from the discretionary liquidity traders, which enables the survival of the overconfident trader.展开更多
Perceived risk is an important concept in behavioral finance. In this paper, we establish a model of the perceived risk dividend, and study the relation between dividend and the perceived risk. We show that dividend a...Perceived risk is an important concept in behavioral finance. In this paper, we establish a model of the perceived risk dividend, and study the relation between dividend and the perceived risk. We show that dividend and the perceived risk are negative relation.展开更多
基金This paper was funded by the Science and Technology Research Project of Chongqing Municipal Education Commission entitled“Research on Pricing of ETFs and Their Derivatives Driven by Multi-source Heterogeneous Data”(No.KJQN202300567).
文摘Green technological innovation is crucial for the manufacturing industry’s green transformation and sustainable development.This study examines the impact of executive overconfidence on corporate green innovation,focusing on the internal drivers of corporate innovation and using a sample of Shanghai and Shenzhen A-share listed manufacturing companies from 2013 to 2020.We further examine the mediating role of digital transformation and the moderating role of external attention.The findings indicate that executive overconfidence promotes corporate green technological innovation.Overconfident executives enhance green innovation by accelerating digital transformation.Moreover,external attention from analysts and media positively moderates the relationship between executive overconfidence and corporate green innovation.Heterogeneity analysis reveals that the positive impact of executive overconfidence on green innovation is more significant in non-state-owned enterprises,high-tech firms,and enterprises with lower pollution levels.
基金support for the research,authorship,and/or publication of this article.
文摘Overconfidence behavior,one form of positive illusion,has drawn considerable attention throughout history because it is viewed as the main reason for many crises.Investors’overconfidence,which can be observed as overtrading following positive returns,may lead to inefficiencies in stock markets.To the best of our knowledge,this is the first study to examine the presence of investor overconfidence by employing an artificial intelligence technique and a nonlinear approach to impulse responses to analyze the impact of different return regimes on the overconfidence attitude.We examine whether investors in an emerging stock market(Borsa Istanbul)exhibit overconfidence behavior using a feed-forward,neural network,nonlinear Granger causality test and nonlinear impulseresponse functions based on local projections.These are the first applications in the relevant literature due to the novelty of these models in forecasting high-dimensional,multivariate time series.The results obtained from distinguishing between the different market regimes to analyze the responses of trading volume to return shocks contradict those in the literature,which is the key contribution of the study.The empirical findings imply that overconfidence behavior exhibits asymmetries in different return regimes and is persistent during the 20-day forecasting horizon.Overconfidence is more persistent in the low-than in the high-return regime.In the negative interest-rate period,a high-return regime induces overconfidence behavior,whereas in the positive interest-rate period,a low-return regime induces overconfidence behavior.Based on the empirical findings,investors should be aware that portfolio gains may result in losses depending on aggressive and excessive trading strategies,particularly in low-return regimes.
基金Project supported by the Youth Program of the National Social Science Foundation of China(Grant No.18CJY057)。
文摘It is generally accepted that herding behavior and overconfidence behavior are unrelated or even mutually exclusive.However,these behaviors can both lead to some similar market anomalies,such as excessive trading volume and volatility in the stock market.Due to the limitation of traditional time series analysis,we try to study whether there exists network relevance between the investor’s herding behavior and overconfidence behavior based on the complex network method.Since the investor’s herding behavior is based on market trends and overconfidence behavior is based on past performance,we convert the time series data of market trends into a market network and the time series data of the investor’s past judgments into an investor network.Then,we update these networks as new information arrives at the market and show the weighted in-degrees of the nodes in the market network and the investor network can represent the herding degree and the confidence degree of the investor,respectively.Using stock transaction data of Microsoft,US S&P 500 stock index,and China Hushen 300 stock index,we update the two networks and find that there exists a high similarity of network topological properties and a significant correlation of node parameter sequences between the market network and the investor network.Finally,we theoretically derive and conclude that the investor’s herding degree and confidence degree are highly related to each other when there is a clear market trend.
文摘Adaptive online platforms,powered by artificial intelligence,commonly referred to as robo-advice,steadily increase their market share.Yet these comparably new financial services are critically understudied.Little is known about why some investors adopt robo-advice for something as essential as asset allocation.The current paper tries to close this gap by shedding light on the causal effect of investor overconfidence on the propensity of using robo-advice.The study proposes a theoretical framework that combines the divergence of opinion hypothesis with consumer behavior insights and information technology diffusion research.The framework is empirically tested on the Investor Sample of the 2015 National Financial Capability Study,a subsample of 2000 US investors.The results from a series of generalized linear,structural,and semipara-metric models show that in a pre-chasm market,overconfident investors have a significantly higher propensity of adopting robo-advice.While higher financial literacy seems to decrease robo-advice uptake,unjustified confidence in one’s knowledge causally increases it.Willingness to take financial risk cannot account for the significantly increased adoption of robo-advice among overconfident investors.The findings help managers to better position robo-advice by offering behavioral insights into their user base.In addition,the results outline a managerial tool to take demand-side actions to increase the likelihood of an end-user innovation crossing the chasm.
文摘This paper offers new insights into the Italian mutual fund industry. Surveying Italian professionals, we do not only reveal typical gender differences but also detect divergence to their German counterparts. While disclosing Italian professionals＇ overly positive self-assessment in general, we find evidence for male overconfidence in particular--though without being accompanied by excessive control illusion of the own information level. Asset managers＇ risk taking reveals further differences： Italian female professionals do not only assess themselves as more risk averse than their male colleagues, they also prefer a more passive portfolio management compared to the level they are allowed to. Moreover, in a tournament scenario near the end of the investment period female asset managers do not try to become the ultimate top performer when they have outperformed their peer group so far. However, in case of underperformance, the risk of deviating from the benchmark makes especially female professionals willing to seize a chance of catching up. Overall, compared to their German counterparts, we find Italian asset managers to be slightly more risk averse. Matching bounded former results on Italian mutual funds, we discuss interdependencies as well as impact of our findings at the individual asset managers＇ level on trading activity, management style and performance.
文摘The application of behavioural theory to corporate finance is now attracting the attention of theoretical work. However, very little rigorous empirical work has been carried out to analyse the desirability of behavioural biases in relation to financing decisions. The main results argue that managerial overconfidence provides an alternative determinant of capital structure. However, many questions remain to be explored, related to overconfidence measures and positive/negative effects of managerial overconfidence. Our paper assumes that the combination of financial theory and behavioural theory leads to better explanatory power. We follow two complementary goals. Firstly, we examine the dynamic trade-off model introducing a behavioural perspective. Secondly, we propose extending the pecking order analysis to incorporate overconfidence in Shyam-Sunder and Myers＇s model. We use a sample of Tunisian firms and employ panel-data estimation procedures to account for endogeneity and spurious correlation issues. Our results confirm the assumption that manager confidence is positively related to debt level. Overconfident managers underestimate the probability of financial distress and will choose higher levels of debt than they would if they were ＂rational＂.
文摘This paper takes the Chinese listed company with the equity refinancing qualification from 2012 to 2013 as the research object, and uses the residual revenue model to calculate the equity financing cost. This paper discusses the impact of the overconfidence of executives on the equity financing cost and its impact mechanism. The unique institutional background examines the differences in property rights characteristics. The research found that:(1) executive overconfidence has a negative impact on the cost of equity financing, executives tend to be overconfident, the higher the equity financing cost of the company;(2) the overconfidence of executives to state-owned enterprises compared to private enterprises The negative impact of financing costs is more significant;(3) in addition, this paper also examines the potential impact mechanism of executive overconfidence on the cost of equity financing. The quality of information disclosure and the risk of investor prediction have a mediating effect on the impact of executive overconfidence on equity financing costs.
基金supported by the National Natural Science Foundation of China under Grant Nos.71303265and 71573289the Innovative Research Group Project of National Natural Science Foundation of China under Grant No.71721001
文摘The aim of this paper is to develop a multi-period economic model to interpret how the people become overconfident by a biased learning that people tend to attribute the success to their abilities and failures to other factors.The authors suppose that the informed trader does not know the distribution of the precision of his private signal and updates his belief on the distribution of the precision of his knowledge by Bayer's rule.The informed trader can eventually recognize the value of the precision of his knowledge after an enough long time biased learning,but the value is overestimated which leads him to be overconfident.Furthermore,based on the definition on the luckier trader who succeeds the same times but has the larger variance of the knowledge,the authors find that the luckier the informed trader is,the more overconfident he will be;the smaller the biased learning factor is, the more overconfident the informed trader is.The authors also obtain a linear equilibrium which can explain some anomalies in financial markets,such as the high observed trading volume and excess volatility.
基金This project is supported by National Natural Science Foundation of China（70571042）
文摘Some financial experiments find that individuals＇ risk perception in favor of shortfall measures like LPMs. This paper provides an individuals＇ risk perception model and a risk perception model with overconfidence according to results of financial experiments and shows that investors＇ psychology could influence individuals＇ risk perceptions, and further, investors＇ psychology could influence investment decisions.
文摘Due to the relatively short history of the development of the Chinese stock market,the investment philosophy and psychology of most individual investors are not particularly mature.Especially under the influence of public health emergencies,the individual investors’characteristic of the investment behavior in the stock market has become more obvious.This paper combines questionnaire and psychological experiments to study the factors that affect investment decisions of individual investors,and then takes COVID-19 as an example to analyze the impact of public emergencies on individual investors’investment decisions in the stock market.
文摘This paper studies Whether the managerial overconfidence have any impact on the Cost management （Characterized by the degree of the Costs Stickiness ） .Using the ample of the A-share listed companies between 2007-2011 in China, We document that SG＆A cost stickiness decreases in the degree of overconfidence. The further studies show the negative relation is more significant in the state-owned listed companies,which proved our speculation that the manager will cut expenses avoiding significant decline in performance when the sales decline in the state-owned listed company.
文摘Apparent biases in decision making by animals, including humans, seem to present an evolutionary puzzle, since one would expect decisions based on biased （unrealistic） information to be suboptimal. Although cognitive biases are hard to diag- nose in real animals （Marshall et al., 2013b）, we investigate Trivers＇ proposal that individuals should self-deceive first in order to better deceive others （Trivers, 2011）. Although this proposal has been scrutinized extensively （Bandura et al., 2011） it has not been formally modelled. We present the first model designed to investigate Trivers＇ proposal. We introduce an extension to a re- cent model of the evolution of self-deception （Johnson and Fowler, 2011）. In the extended model individuals make decisions by taking directly into account the benefits and costs of each outcome and by choosing the course of action that can be estimated as the best with the information available. It is shown that in certain circumstances self-deceiving decision-makers are the most evolutionarily successful, even when there is no deception between these. In a further extension of this model individuals addi- tionally exhibit deception biases and Trivers＇ premise （that effective deception is less physiologically costly with the aid of self-deception） is incorporated. It is shown that under Trivers＇ hypothesis natural selection favors individuals that self-deceive as they deceive others .
基金Supported by National Natural Science Foundation of China(Grant No.11301563)the Program for innovation Research in Central University of Finance and Economics+1 种基金Beijing Municipal Education Commission Scientific Research PlanSocial Science Plan General Project(Grant No.KM201710017004)
文摘We build a strategic trading model where the overconfident trader earns more than the rational trader and the mechanism for this result differs from that of Kyle and Wang(1997). In this paper, discretionary and nondiscretionary liquidity traders coexist. The overconfident insider is less worried by the market maker and thus induces a lower liquidity cost. In this way, he attracts all the trading from the discretionary liquidity traders, which enables the survival of the overconfident trader.
基金This project is supported by National Natural Science Foundation of China （70571042）.
文摘Perceived risk is an important concept in behavioral finance. In this paper, we establish a model of the perceived risk dividend, and study the relation between dividend and the perceived risk. We show that dividend and the perceived risk are negative relation.
