The Correlational Study On Income Gap Between FDI And Rural-urban Resident In China

The research of existing behavioral financial theory shows that managers’ investment decisions are frequently influenced by their own psychological factors, especially by their overconfidence. As a deep-rooted psychological characteristic, management overconfidence, shown as the overestimation of their own abilities and the excessive optimism to earnings of a project, will naturally affected their investment decisions to a large extent. This meanwhile also has profound influence on deepening enterprise’s investment distortions. As equity structure governance is one of the cores of the enterprise’s internal governance, it affects the formation and operation of corporate governance modes directly, as well as affects its major decisions significantly. This article focuses on the relationship between different ownership and management overconfidence-caused investment distortions on the base of previous theoretical and empirical researches related with management overconfidence, aiming at finding out ways to eliminate the impact management overconfidence caused to corporate investment distortions, help to set up the more reasonable equity structure, more effective internal governance and enrich the research on management overconfidence.This article combines the normative analysis and empirical test. Firstly, it summarizes the latest research of predecessors to deduce the content and direction of the article further. Secondly, put forward the relevant assumptions and set the econometric model on the base of the assumptions, so as to further test and analysis the assumptions. Finally, summarize the above theories and empirical research results to lay the foundation of putting forward the policies suggestions.This article selected the data of A-share companies on Shanghai and Shenzhen Stock Exchange from year2006to2010as the study sample, to study the relation among equity structure, management overconfidence an corporate investment distortions by theoretical analysis and empirical research. The result shows that overconfident managers often overestimate their own abilities, and make the decisions that will damage the enterprise value. This will deepen the distortion of the corporate investments. As the core of the company governance, the different equity holders have varying degree impact on the investment distortions caused by management overconfidence:the balance shares and enterprise shares have the incentive to supervise the management more effectively on behalf of the protection of their own interests. The increase in the proportion of the those two type shares will decrease the investment distortions caused by management overconfidence, because of their abilities to endure the costs of the supervision of management. Due to its owners phantom, State-owned shares makes the managers be the shareholders as well as managers at the same time, thereby intensified the management overconfidence to some extent, also increase the degree of investment distortions caused by management overconfidence. Social public offerings, with less stake and dispersed shareholders, have no influence on management overconfidence. Manager shares, because of their low percentage in the present listed companies and the low holding ratio, almost have no effect.