کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
973194 | 932768 | 2011 | 17 صفحه PDF | دانلود رایگان |
![عکس صفحه اول مقاله: Agency cost, top executives' overconfidence, and investment-cash flow sensitivity — Evidence from listed companies in China Agency cost, top executives' overconfidence, and investment-cash flow sensitivity — Evidence from listed companies in China](/preview/png/973194.png)
We examine the effect of agency cost on the relation between top executives' overconfidence and investment-cash flow sensitivity using the data from Chinese listed companies. We find that on average top executives' overconfidence leads to increased investment-cash flow sensitivity. However, this relation holds only for companies with state-owned entities as controlling shareholders. In contrast, the relation is not significant for non-state controlled firms. We construct proxy for agency cost and find that state-controlled companies have significantly greater agency cost than non-state controlled companies. Results on sub-samples sorted by agency cost again show that the positive effect of top executives' overconfidence on investment-cash flow sensitivity holds only for companies that exhibit high agency cost. Our results therefore suggest that agency cost has a significant impact on the relation between top executives' overconfidence and investment-cash flow sensitivity, and the investment distortion due to top executives' overconfidence behavior may be alleviated by reducing agency cost through elevated supervision.
Journal: Pacific-Basin Finance Journal - Volume 19, Issue 3, June 2011, Pages 261–277