Research On The Irrational Behavior Of Corporate Manager

The irrational behavior of the manager of corporate is, briefly, that managers deviate from maximizing firm value because of influence of irrational investor and himself cognition problems. Until recent years, academic researchers have shed some light on the irrational of managers. Now there are still a lot of problems to be solved within this area.Barberis and Thaler (2001) expound the Behavioral Corporate Finance by researching behavior of managers from the point of Behavioral Finance. Behavioral Corporate Finance is interested in two irrational behaviors, which can influence the capital structure: the irrational investors and managers in the capital market. The main problems that Behavioral Corporate Finance is researching are: (1) whether the irrational investors can influence the behavior of managers? In other words, when the price of equity obviously deviates from the true value, what do managers will do? Include investment , financing and dividend. Whether managers can rectify the mispricing of investors. Because of agency problems, if these managers will change their mind to maximize themselves' benefit when investors are irrational in the capital market.(2)Can irrational managers effect the capital structure of corporate? Will irrational investors do when they face irrational managers?This essay is to do the research in the field of irrational behavior of managers and investors from inside and outside. Based on Behavioral Corporate Finance and Market Timing Theory(Stein,1996),I will research that how the irrational behaviors of managers influence the decide of firm's investment, financing and dividead. Using above outcomes in combination with the peculiarity situation of our country's capital market, I will find the problems and give my proposal.