| Managerial overconfidence is a kind of subjective emotion. Just the right amount of confidence can bring benefits to the company, but excessive confidence will affect the company’s financial decision-making, especially managerial overconfidence is likely to cause irrational financing behavior, damage the company’s long-term interests and values. This paper attempts to study the influence of managerial overconfidence on the financing decision in our country and the impact of corporate governance structure to the irrational financing caused by managerial overconfidence at the system arrangement and equity background.This paper first combs and reviews the related research of managerial overconfidence impacting on the listed companies’financing decision, defines the concept of managerial overconfidence and financing and analysis the possibility that our listed enterprises’overconfident managerial prefer to debt financing from pecking order theory and control angle. This article uses forecast surplus income level higher than the actual level or the inconformity of optimistic forecasts and the actual level after the event to measure managerial overconfidence. This article selects listed companies which have been disclosured the third quarter earnings reports of increase at China’s A stock markets of Shenzhen and Shanghai in2008-2010as the research objects, excluding the financial industry, ST,*ST, more than100%of the asset-liability ratio and incomplete data samples, with645listed companies as research samples, the main use of descriptive statistical analysis and linear regression analysis, etc. This paper will lead to introduce the two variables of corporate governance structure:share ratio of the largest shareholder and the size of the board into model, analyzes the influence of corporate governance structure to the financing decision in managerial overconfident companies, in order to observe whether the corporate governance structure can inhibit irrational financing caused by managerial overconfidence.The results of this paper show that in the listed companies of China does exist managerial overconfidence phenomenon, managerial overconfidence is positively related to asset ratio, and in the managerial overconfident companies the share ratio of the largest shareholder negatively related to asset ratio, the size of the board and the asset-liability ratio is positively related. The higher ratio of the largest shareholder, the smaller size of the board, the less the managers tend not to debt financing in managerial overconfident companies. It can be seen that improving corporate governance structure can restrain high debt financing decisions caused by managerial overconfidence. |
