Managerial overconfidence and firm expansion: Evidence from China

摘要

Using the data of Chinese publically traded firms, we examine the relationship between managerial overconfidence and firm expansion and find that managerial overconfidence is positively correlated with the rate of firm expansion. In particular, overconfident managers tend to internally expand firms in an aggressive manner. Also a negative, though not statistically significant, relationship exists between managerial overconfidence and M&A activity.