Executive overconfidence and R&D expenditure — Empirical evidence based on data of small and medium-sized listed companies in China

The research tries to investigate the relationship between managerial overconfidence and R&D expenditure. Making small and medium-sized listed companies in China as samples, shareholding owned by manager and its variation as a substitute for the overconfidence, using OLS analysis method, we make an empirical analysis on the relationship between managerial overconfidence and R&D expenditure. Research results show that executive overconfidence is positively associated with R&D spending. The more overconfident the executive is, the more R&D spending the firm carries on. This paper also concludes that executive/chairmen duality and debt can restrain companies R&D activity.