This paper examines the impact of shareholder intervention on investment distortions, which we capture using overinvestment of free cash flow by overconfident CEOs. Using this definition and U.S. data for 1996–2014, our fixed effects and difference-in-difference matching estimation results provide consistent evidence that the threat of potential intervention of shareholders can curb overinvestment by overconfident CEOs. Specifically, firms with greater voting premium and hedge fund activism experience less overinvestment and exhibit lower sensitivity of free cash flow to investment. Such disciplining effects are stronger for firms managed by overconfident CEOs. Overall, our results suggest that shareholder intervention is particularly effective at mitigating overinvestment that is more likely to be distorted.

本文研究了股东干预对投资扭曲的影响，我们利用过度自信的首席执行官对自由现金流的过度投资来捕捉这种影响。使用此定义和1996-2014年的美国数据，我们的固定效应和差异差异匹配估计结果提供了一致的证据，表明股东潜在干预的威胁可以抑制过度自信的CEO的过度投资。特别是，投票权溢价和对冲基金积极性较高的公司，较少的过度投资，自由现金流对投资的敏感性也较低。对于那些过分自信的CEO管理的公司来说，这种纪律作用会更强。总体而言，我们的结果表明，股东干预在减轻过度投资（更可能扭曲）方面特别有效。