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The traditional investment theory based on the MM theory is based on a series of rational hypothesis. However, with the rise and spread of behavioral financial theory, more and more research shows that the traditional investment theory has a lot of limitations. Therefore, based on relevant research of the behavioral finance theory, this paper constructed the potential link between a use overconfidence hypothesis to explain corporate investment model. Through this model, this paper makes a thorough analysis of the management mechanism of overconfidence on corporate investment behavior, and summarizes the relevant research literature. The paper delves deeper the potential linkages between managers overconfidence and corporate investment efficiency, and provides reference suggestions for corporate governance in the future.
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