The Empirical Analysis Of The Relationship Between The Managerial Overconfidence And The Cash Dividend Payment Behavior Of The Listed Company

The dividend policy is about whether to distribute dividends, how many to distributeand when to distribute. It is essentially the result of unceasing negotiations betweendifferent interest parties by cooperation and competition. Meanwhile, the manager is themain participant who can decide the competitive strength of each party, and therefore cashdividend policy will be affected by the managerial overconfidence. The Chinese stockmarket starts late but develops fast, and the listed companies’ irrational behavior ondividend distribution appears very obvious. The traditional dividend theory could nottotally explain the anomalies in companies’ dividend distribution, which demands us tostudy the Chinese listed companies’ dividend policy from a new perspective.Based on the development of psychological research, rational economic manassumption is relaxing and the booming of behavioral corporate finance,managersirrational assumptions were introduced to the company’s dividend policy areas, theresearchers combined the basic hypothesis and research method of the behavior financewith the behavior of the manager to enhanced the research of dividend policy from theperspective of managerial behavior characteristics, Showed strong explanatory power.Psychological experiments have proved that in the Chinese business managersoverconfidence is common. Listed companies in China are mostly restructured from thestate-owned enterprises, governance structure is imperfect, the setting of state-ownedproperty owner is virtual. The “Dominance of the No.1shareholder” and “Internal Control“problems is generally. Because internal governance mechanism is not perfect, and themissing of external governance mechanisms, managers of listed companies occupyabsolute leading role in the company’s dividend policy, managers irrational will be moreprominent, seriously affect the listed companies value and innovation. Managers irrationalincludes: overconfidence, bounded rationality, reference point preference, herd behavior,regret aversion and hyperbolic discount. Overconfidence is the most commonly managersirrational behavior, is the most confirm deviant behavior, so the study research onlyresearch managerial overconfidence, and then studies overconfidence managers whetherimpact the company’s dividend policy.The paper firstly introduce and define the dividend policy and managerialoverconfidence, followed introduce the traditional theory of dividend policy from rationalparadigm and behavioral paradigm. At the same time, introduce the features of the china’s A stock market cash dividend distribution. Again by establishment a simple mathematicalmodel derive how managerial overconfidence affect the cash dividend policy. And finallydo the empirical test between managerial overconfidence and the listed company’s cashdividend policy from2005—2011dataes.Model analysis and empirical results show that managerial overconfidencesignificantly affects corporate dividend policy. Managerial overconfidence has been causedby means of impacting on the business investment behavior, excessive investment, therebyaffecting the selection between the investing and dividend payout,which led toconservative dividend policy.