Abstract: Based on theory of behavioral and psychological science, people are prone to be overconfident because of self-attribution bias (SAB) when facing a serie of successes. Based on China's listed corporate data during 2001-2013,due to managerial SAB, we find that overinvestment firms overinvest more when high past performance exists; moreover, the overinvestment levels are high in the firms with 2-year-least consistent high performance, especially 3 years consistent ones. At last, our study provides evidence that the present corporate government in China can reduce but not remove this relationship between consistency of high performance and overinvestment. Our suggestion is that top executives should notice SAB in decision-making when facing past consistent successes.

Key words: cognitive bias, overconfidence, consistency of financial performance, overinvestment, corporate investment