Research On The Influence Of The Board Governance Structure On The Relationship Between Management Overconfidence And Investment Behavior Of Companies

In traditional economic theory, both the "rational economic man" as the basicassumption that managers in making decisions about the company is entirely rational.But in real life, the economy, more and more abnormal phenomenon, the traditionalfinancial model has been unable to carry out a reasonable explanation of thesephenomena. With the continuous development of behavioral finance theory, scholarsstudy found that the underlying financial theory itself irrational psychologicalmanagers may have an impact on decision-making. Overconfidence is an importantaspect of the theory of behavioral finance theory. Managerial overconfidence is"irrational " as the basic assumptions, a more realistic perspective, making thefinancial research company closer to reality.In this paper, behavioral finance theory point of departure for the study,focusing on the impact of managerial overconfidence generated by the company’sinvestment behavior. By reading the previous literature, summarize the results ofprevious studies. This paper argues that managerial overconfidence level ofinvestment in the company has a positive influence. In some special period, due toexcessive investment managers overconfidence led to the company may giveunexpected gains, but may also make the company in financial trouble, to thedetriment of the company’s value. So, overconfidence is a double-edged sword,managers should grasp the principle of proportionality. In this paper, behavioralfinance perspective, exploring the governance structure of the board of directors andcorporate managers overconfidence investment behavior relations. Board corporate governance as an important sector, should play an active role in their managerialoverconfidence psychological constraints, to ensure managers can make the rightdecisions. This paper studies the regulation of the board of directors from four aspectsof the Board ’s diligence, board size, board independence, the Board of ownershipconcentration. The study found that the higher the degree of diligence Board,overconfidence on the company ’s positive impact on the investment behavior ofmanagers weaker; larger the size of the board of directors, managers overconfidenceon the company, the stronger the impact of investment behavior; moderator role ofindependent directors do not significant, probably due to our imperfect systemindependent directors, independent directors did not play its due role; board memberownership concentration, the stronger the stronger managerial overconfidencepositive impact on the investment behavior.Through this study, we explore the research scope of the company’s boardgovernance and investment behavior, but also enriches the behavioral finance theory.In-depth study of board governance for managers restrict the ability of non-rationalbehavior. The Board also hope for how to improve governance, strengthen thesupervision of company managers and suppress acts of alienation investment toprovide a reference.