How Does CEO Overconfidence Influence Market Value Through R&D and Financial Performance?

[[abstract]]In recent years, the topic of managers’ irrational behaviors has drawn increasing attention. Related studies mostly focus on discussion about corporate managers, while few shed light on their impact on R&D output. This study measures Taiwan's electronics technology industry managers’ over-confidence level by their prediction of profit in the future and further examines whether difference between R&D outputs influenced and not influenced by manager’s over-confidence is statistically significant. It also discussed the influences of the ratio of R&D expense and equity variable on their operating performance, from which the impacts of their performance on their market value can be reflected. The empirical results showed that: (1) the managers’ over-confidence level has no significant influence on the quantity of patents; (2) the quantity of patents has a significantly positive influence on a company’s operating performance; (3) the operating performance of a company has a significantly positive influence on its market value