A Study On Manager Overconfidence Impacting On Cash Dividend Policy In Listed Companies

Dividend policy, as an important part of the company’s financial, whether it isreasonable or not is related to the financing of the company thereby affecting thecompany’s investment, and a reasonable dividend policy can also mobilize theenthusiasm of investors to maximize the value of the company. China’s capital marketis not perfect, and the stock market starts later than in Western countries. There aremany unreasonable behaviors among the managers’ behaviors of the dividenddistribution, such as not paying dividends, paying or sending or transfering toomany dividends and other phenomena. Traditional theories of dividends on thedividend distribution of these anomalies can not make a reasonable explanation, toexplore a new angle to explain the dividend distribution policy has become one of theurgent tasks.The forming of behavioral finance provide a new perspective for us to explainstock market anomalies. It does away with the important assumption of rationaleconomic man in the traditional financial theory, and joins policymakers’ behavioralfactors, considering the psychological factors of the managers. Based on the previousstudies, this study focuses on the framework of behavioral finance theory and uses2008-2010sample data in the Shenzhen and Shanghai stock market. It combinesliterature review, theoretical analysis and empirical analysis to explore the cashdividend policy of listed companies in our country. The paper also takes thecompany’s internal governance variables into consideration, in order to study whetherinternal governance mechanisms have an impact on over-confident managers’irrational dividend behavior. This study is structured as follows:The first part is the introduction, this part introduces the research background ofthis article and presents the research purposes, significance, method and innovation points, finally introduces the framework of this study.The second part is a literature review. Firstly defines the related concepts of themanager’s overconfidence, and then describes the review of overconfidencequantitative research, followed by the research on the relationship between managersoverconfidence and dividend policy, finally summarizes the research on therelationship between corporate governance and dividend payout.The third part is the theoretical analysis and the assumption. The assumption isbased on theoretical analysis and previous research in this study.The fourth part is the research design, introduces sample selection and thedefinition of the variables involved, the payment of cash dividends is explanatoryvariable, selects overconfidence, overconfidence and the intersection of corporategovernance is the independent variable, and selects Tobin’s Q, profitability, companysize as the control variables. Finally, on this basis and learn from the previous study,we construct an empirical model of this article.The fifth part is the results of the empirical analysis, in order to test theconsistency of the results, we conduct a robustness test.The sixth part is the conclusions, we summarize the conclusions and presentrelated policy recommendations for the conclusions. Finally, we illustrate thelimitations and shortcomings of this study.