Earticle

초록

영어

This study demonstrates that the underinvestment problems due to a higher debt-equity ratio in corporate investment decisions can be mitigated by the overconfidence of managers. It can also mitigate the negative effect of a high debt ratio on cash dividends. The empirical results are as follows. First, we observe a decrease in capital expenditure and R&D investment, say "investment", and cash dividend with higher debt-asset ratios, resulting in significantly decreased firm values, consistent with existing literature. Second, however, higher management overconfidence results in lesser problems of underinvestment and passive dividend payout policy due to creditors’ influence. Third, even if the debt ratio is high, the level of the decrease in firm value is significantly reduced if management overconfidence is high. Fourth, however, the mitigating role of the management overconfidence is observed only in the firms belonging to highly competitive product markets, not the other way around. In short, higher management overconfidence can have a positive effect on corporate investment and firm value if product market competition imposes external discipline.

목차

Abstract
Ⅰ. Background of the Study
Ⅱ. Literature Review and Hypotheses Settings
Ⅲ. Data and Models
1. Sample
2. Definition of Variables
3. Empirical Models
Ⅳ. Empirical Results
1. Test of Nonlinearity between Investment, Dividend, Tobin’s Q, and Leverage
2. The impact of debt ratio on corporate investment with management overconfidence
3. The impact of debt ratio on the cash dividend with management overconfidence
4. The impact of debt ratio on the firm value with management overconfidence
5. Robustness test and further analyses
V. Conclusion
References

키워드

저자

• Kyung Suh Park [ Professor of Finance at Korea University Business School ]
• Chan Shik Jung [ Associate Professor of Finance at Dong-A University ] Corresponding author

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  재무연구 [Asian Review of Financial Research]

• 간기

  계간

• pISSN

  1229-0351

• eISSN

  2713-6531

• 수록기간

  1988~2026

• 등재여부

  KCI 등재,SCOPUS

• 십진분류

  KDC 325 DDC 330