A Study On Managers' Overconfidence And Corporate's Financing

The traditional economics theory is based on the assumption that enterprise management is rational economic person. However, in the real business process, a lot of phenomenons which the traditional economics theory fails to explain appear. The traditional economics theory was questioned more than before. With modern decision psychology research's significant progress, some economists relax the rational economic person assumption constantly, propose the not completely rational economic person assumption. In the process of the economic development of our country, listed company's managers irrational psychological characteristics (especially managers'overconfidence) widespread exist. The psychological characteristics of managers' overconfidence has seriously affected the financing decisions of listed companies.In this background, this paper choose the listed companys which publish optimistic forecast performance both in Shanghai and Shenzhen Stock Exchanges during the period of 2007 and 2009 as the research samples, use performance prediction deviation to measure managers'overconfidence, apply Ordered-Probit model to test the relationship between managers'overconfidence and financing order of listed companies. On this basis, establish two multivariate regression models to separately examin how the managers'overconfidence influence debt financing rate and debt maturity structure.The research results show that Chinese listed companies choose debt as the first financing way, but the probility of companys which are managers'overconfidence choosing external equity financing is greater than the companys which are managers'non-overconfidence. Managers'overconfidence has an significantly positive correlation with listed companys'debt financing rate. And the listed companys which are managers'overconfidence choose longer debt maturity structure.