Abstract
What factors restrict innovation investment? Existing traditional theories have given some explanations, but for the phenomenon of innovation investment differences in companies with similar fundamentals or the same company before and after management change, the existing theories cannot explain it. With the gradual rise in the management irrationality theory, this paper explains the innovation investment of enterprises from the new perspective of CEO overconfidence and famine experiences in early years, and compares the effects of these two to verify which is more important for enterprise innovation investment. By selecting information technology and manufacturing firms listed in Shanghai Stock Exchange and Shenzhen Stock Exchange from 2002 to 2013, it uses the panel regression from the static perspective and DID model based on CEO change events & from the dynamic perspective to come to the conclusions that CEO overconfidence is beneficial to the promotion of enterprise innovation investment, and the famine experiences in CEOs' early years inhibit the increase in innovation investment, which is more obvious in CEOs' childhood and adolescence. At the same time, the impact of CEO famine experiences on enterprise innovation investment is greater than the impact of CEO overconfidence, showing that the impact of personal experiences in CEOs' early years on enterprise innovation investment is more visible. In addition, through enterprise heterogeneity test, it finds that the influences of these two on enterprise innovation investment are more obvious in firms with higher R&D intensity and weak constraint mechanism and state-owned enterprises. This paper not only expands enterprise innovation and management irrationality theories, but also provides the decision basis for enterprises to select the appropriate management.
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