An Empirical Study On How Managers' Overconfidence Influences Dividend Policy Among Listed Companies In Chinese Security Market

Dividend policy is one of the most important four financial management activities. It's the stretch of financing and investing activities, as well as the performance of operating results. Laying down appropriate dividend policy by managers is always the key issue studied by academic experts. As it is known to us dividend activities directly influence the value of the listed companies. Studies on dividend policy have bloomed since mid 20th century. Since then, not only by theory bases, but also from practical market data, there have come to a complemented theories cluster on dividend policy. Still, each of the theory cannot solve issues born in it.With the results coming from psychological research, there are common awareness bias, which leads to irrational decisions and activities, which directly influence all financial activities. Thanks to this fruitful result, academic scholars find a new way the study dividend policy: that is introduction of awareness bias into dividend policy research. Be based on prospective of managers'overconfidence, an empirical research about the managerial overconfidence in Chinese listed company is carried on with company samples listed between 2007 and 2010 in Shanghai Stock Exchange.The paper has four main parts. The first part referring to chapter 1 mainly mentions background of this paper, and subsequently, come to the issue to be studied that the dividend activity among Chinese listed companies differentiates greatly from well-developed capital market in western countries.The second part is composed of chapter 2 and chapter 3 mainly introduces the related theories involved in this paper. Literature analysis and comments on the dividend activities and managerial overconfidence are summarized in Chapter 2. Researches, both at home and abroad, about effects on dividend policy caused by overconfidence have been briefly summarized. Then, theories of the relationship between managerial overconfidence and dividend activities is analyzed which has laid a solid foundation for following research.The third part, including chapter 4,is the core part of the paper. Empirical test on how managerial confidence influences dividend activities is done in this part. Based on the finance viewpoint of behavioral corporation, an empirical research about managerial overconfidence in by Chinese companies to dividend policy is carried on with company samples listed between 2007 and 2010 in Shanghai Stock Exchange. The conclusion shows that manager's overconfidence is strongly positive related with the dividend in share, and there is no obvious relation between managers'overconfidence and dividend in cash. By further Granger cause test, it is found that manager's overconfidence is actually the cause of dividend in share. That is to say managers'overconfidence is direct incentive to motivate dividend in share.The last part of this paper includes chapter 5. Based on the conclusions of empirical study from the former part, the author gives some policy proposals on how to supervise and avoid irrational dividend policy. Moreover, the author draws some research blueprint further to study this topic.