Empirical Study On The Relationship Between Manger Overconfidence And Financing Order For Listed Companies In China

Financing behavior has always been the hot issue of theories field. In the theory study of behavior, our country is in the initial stage especially in the studies on the relationship between managers'overconfidence and corporate financing structure. From the perspective of behavioral finance, we discard the rational manager hypothesis and try to study whether managers'overconfidence influence corporate financing structure in Chinese Listed Companies? And if so, how does it influence corporate value?First, the paper summarized the relationship between the origin of managers' overconfidence and corporate financing. The paper ruled out the derogatory meaning of "overconfidence", and defined it as the manager overestimate the accuracy of his information, his ability to make decisions, and thus, he will overestimate the future performance and underestimate the future risk. Second, the author analyzed the financing environment of our listed companies and the characteristics of financing behavior of our country. Thirdly, having considered other influent elements and having based the empirical study already existed that overconfident managers preferred debt financing, this paper try to further study overconfident managers' preference between long-term liabilities and short-term liabilities when they choose debt financing. And furthermore, this paper also tries to research overconfident managers'tendency between long-term borrowings and short-term borrowings. How do overconfident managers influence the credit financing was also investigated in this paper. The empirical results showed the relationship between managers' overconfidence and short term asset-liability ratio is obviously positive correlated; the relationship between managers'overconfidence and the long term debts ratio is obviously negative correlated; the proportion of business credit financing shows a growth trend with managers'overconfidence.How to measure overconfidence is the main problem in this paper. Roll(1986), Malmendier and Tate(2005) had proved that overconfidence was significantly related to company's acquisition. The foreign and Chinese scholars confirmed the validation of this conclusion. So, this paper adopts "whether it is a success of the first merger" as the measurement of managers'confidence.From this paper, the conclusion is that managers overconfidence has a significant influence on the financing structure, overconfidence managers are inclined to choose short-term liabilities and will increase the use of credit financing.