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Future Business Journal

Table 3 Regression results of influences of managerial overconfidence in the relationship of corporate governance mechanisms and firm performance (ROA)

From: The impact of corporate governance measures on firm performance: the influences of managerial overconfidence

Variables

Firm performance (ROA)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

L.ROA

0.398***

0.401***

0.403***

0.399***

0.399***

0.405***

0.401***

(0.0251)

(0.0251)

(0.0253)

(0.0255)

(0.0252)

(0.0247)

(0.0251)

BIND

0.0823

0.0900*

0.113

0.0899*

0.0861

0.0897*

0.0899*

(0.0539)

(0.0542)

(0.0978)

(0.0543)

(0.0541)

(0.0538)

(0.0542)

DUAL

0.0103**

0.00987**

0.00931*

0.0200**

0.00910*

0.00973**

0.00987**

(0.00484)

(0.00481)

(0.00482)

(0.00925)

(0.00485)

(0.00480)

(0.00482)

OWCON

0.000462***

0.000499***

0.000506***

0.000501***

0.000745***

0.000497***

0.000499***

(0.000108)

(0.000107)

(0.000106)

(0.000108)

(0.000192)

(0.000107)

(0.000107)

DF

− 0.0594***

− 0.0578***

− 0.0570***

− 0.0577***

− 0.0581***

− 0.0290

− 0.0579***

(0.0126)

(0.0126)

(0.0126)

(0.0127)

(0.0126)

(0.0216)

(0.0126)

PMC

0.0174

0.0186

0.0185

0.0211

0.0190

0.0194

0.0180

(0.0175)

(0.0174)

(0.0175)

(0.0174)

(0.0174)

(0.0174)

(0.0194)

MOC

 

− 0.00832***

0.0366

− 0.00234

0.0148

0.00986

− 0.00836***

 

(0.000926)

(0.0334)

(0.00275)

(0.00990)

(0.00653)

(0.00109)

FSIZE

0.00475***

0.00511***

0.00503***

0.00491***

0.00527***

0.00495***

0.00511***

(0.00120)

(0.00120)

(0.00119)

(0.00120)

(0.00120)

(0.00121)

(0.00120)

FAGE

0.0133***

0.0148***

0.0135***

0.0146***

0.0143***

0.0144***

0.0148***

(0.00257)

(0.00256)

(0.00242)

(0.00257)

(0.00245)

(0.00259)

(0.00255)

SGWTH

0.0655***

0.0637***

0.0638***

0.0635***

0.0636***

0.0634***

0.0638***

(0.00275)

(0.00275)

(0.00275)

(0.00276)

(0.00275)

(0.00275)

(0.00275)

Moc*BIND

  

− 0.120

    
  

(0.0887)

    

Moc*DUAL

   

− 0.0202**

   
   

(0.00838)

   

Moc*OWCON

    

− 0.000404**

  
    

(0.000170)

  

Moc*DF

     

− 0.0449***

 
     

(0.0162)

 

Moc*PMC

      

0.000640

      

(0.0111)

Constant

0

0

− 0.197***

0

0

− 0.200***

0

(0)

(0)

(0.0459)

(0)

(0)

(0.0334)

(0)

Industries/year dummies

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Observations

11,634

11,634

11,634

11,634

11,634

11,634

11,634

Number of firms

2,492

2,492

2,492

2,492

2,492

2,492

2,492

AR(1) test (p-value)

0.000

0.000

0.000

0.000

0.000

0.001

0.000

AR(2) test (p-value)

0.511

0.500

0.492

0.499

0.580

0.452

0.505

Hansen test of over identification

0.139

0.108

0.178

0.176

0.121

0.160

0.114

Difference test of exogenous

0.313

0.223

0.296

0.247

0.359

0.226

0.218

  1. *, **&*** represent the statistical significance at 1%, 5%, and 10% level, respectively
  2. Notes This table reports the system GMM regression results to capture the relationship of CG and firm performance, and interaction effect of MOC and CG on firm performance. Variables included in this model: dependent variable measured by return on asset (ROA); independent variables are: independent board (BIND), dual leadership (DUAL), ownership concentration (OWCON), debt financing (DF), and product market competition (PMC). The interaction variable is managerial overconfidence (MOC). Control variables include firm size (FSIZE), firm age (FAGE), and growth opportunities (SGWTH). The system GMM estimate under column 1 indicates the relationship between CG and firm performance. Column 2 indicates the effect of CG and MOC on firm performance (ROA), and columns 3–7 indicated the influence of interaction terms (MOC *CG) one by one on ROA. This table also reports the model specifications: AR (1) and AR (2) are tested for the first-order and second-order serial correlation, under null hypothesis AR(2) is no serial correlation. The Hansen test over-identifications under the null hypothesis that all instruments are valid. The difference-in-Hansen test of exogeneity is under the null hypothesis that instruments used for the equations in levels are exogenous
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