Empirical Research Of Listed Company Managers Overconfidence And Investment Decisions

With the continuous rapid development of Chinese economy, expanding business investment, investment diversification and some other factors determine that investment has become increasingly important. Right investment decisions can bring a significantly increase value to the enterprise, but if the business activities of enterprises in the excessive investment, insufficient investment and blind mergers and acquisitions companies would damage the value of companies, even it will position enterprises into the financial crisis. In the investment decision-making process, managers play an important role, the psychological characteristics often affect business investment. In 2002, the Shanghai and Shenzhen Stock Exchange formally require that listed companies should publish earnings projections for this year before the end of the third quarter, after nearly a decade of development, this system has been relatively mature. This paper uses earnings forecasts to measure the degree of deviation Management level of confidence, down in the theoretical framework of behavioral; we will have a research with the relationship finance manager overconfidence and corporate investment decision-makingThrough this study, the author hopes to address the following issues: (1) Do the manager of listed companies in Chinese manufacturing, have a psychology of over-confidence? Does psychological overconfidence of managers affect investment decisions of enterprises? (2) Whether the business investment reliance on free cash flow or financing cash flows? Do the overconfident managers have a obvious investment - financing and investment - free cash flow sensitivities? (3) Whether the investment company controlled by the ultimate size of holding percentage? In this effect relationship, do the confident managers play a psychological inhibition? This total is divided into six parts, the article is structured as follows: The first chapter is an introduction, it describes the research background and motivation, purpose and meaning and also it proposes framework and innovation. The second chapter is a literature review, in this chapter we summarize and review the research results domestic and foreign scholars in the field, we found that lack of perspective of previous studies, and it provides a great value for our paper. Chapter III, Chapters IV and V is the main part of this article, we described this paper's research framework, proposed hypotheses and study design, definite the variables related to this study, and finally we did empirical Analysis. Through descriptive statistics, correlation analysis and multiple regression analysis of statistical methods, we study the relationship with the level of confidence and corporate investment.Finally, under the above series of studies, we propose the following conclusions: First, listed companies in China, there are a large number of managers over-confident and over-confident managers tend to be large Business investment spending. Second, overconfident managers have a strong investment - cash flow sensitivity of financing, but we are not certain of whether they have the investment - Free cash flow sensitivity, indicating that over-confident managers has a strong dependence on financing cash flow. Third, the level of business investment spending will be the ultimate controller with the increase of its stake, while the psychological overconfidence of managers would have inhibited the effect of this relationship.In view of the above conclusions, the following policy recommendations are as follows: First, a set of constraints and timely evaluation of management overconfidence psychological restraint mechanism should be established, the maximum degree of mental avoid the alienation behavior because of overconfidence of the lead managers. Second, try to stabilize internal cash flow to prevent the ups and downs of the situation, in order to avoid enterprises over-investment enterprises in a certain extent. Third, we should improve the corporate governance structure and optimization of enterprise ownership structure.