Open Access Journal Article

Managerial Overconfidence and Cash Holding in China: The Moderating Effect of Enterprise Digital Transformation

by Le Bo a,*
a
YanShan College, Shandong University of Finance and Economics, Jinan, China
*
Author to whom correspondence should be addressed.
Received: 1 July 2024 / Accepted: 5 September 2024 / Published Online: 13 January 2025

Abstract

This study examined whether enterprise digital transformation impacts the relationship between managerial overconfidence and cash holdings. As its quantitative analysis approaches, it employed the fixed effect method and the generalized method of moments. Firstly, a positive relationship can be found between managerial overconfidence and cash holdings. This study uses behavioural finance to explain why overconfident managers always hold more cash. Secondly, this study aims to contribute further to the field of investigation, providing additional insight into this matter. This study highlights the significance of digital transformation in mitigating the cognitive bias of overconfident managers and ensuring the organization’s successful development in a highly competitive market. This study finds that enterprise digital transformation effectively mitigates overconfident managers holding excess cash during operations. This research not only enhances the understanding of enterprise digital transformation in relation to economic repercussions but also contributes to the affection of digital economic transformation on the corporate governance of Chinese listed companies.


Copyright: © 2025 by Bo. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Bo, L. Managerial Overconfidence and Cash Holding in China: The Moderating Effect of Enterprise Digital Transformation. Review of Economic Assessment, 2024, 3, 34. https://doi.org/10.58567/rea03030001
AMA Style
Bo L. Managerial Overconfidence and Cash Holding in China: The Moderating Effect of Enterprise Digital Transformation. Review of Economic Assessment; 2024, 3(3):34. https://doi.org/10.58567/rea03030001
Chicago/Turabian Style
Bo, Le 2024. "Managerial Overconfidence and Cash Holding in China: The Moderating Effect of Enterprise Digital Transformation" Review of Economic Assessment 3, no.3:34. https://doi.org/10.58567/rea03030001
APA style
Bo, L. (2024). Managerial Overconfidence and Cash Holding in China: The Moderating Effect of Enterprise Digital Transformation. Review of Economic Assessment, 3(3), 34. https://doi.org/10.58567/rea03030001

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