The Effects Of Managerial Overconfidence On The Listed Companies Investment

Traditional economic theory is based on "rational man" premised on the assumption that people are perfectly rational maximization entirely personal interests of the individual. However, in real life, a lot of "twisted facts" verified "rational man" hypothesis defects. To better explain these anomalies, scholars will research in cognitive psychology cognitive bias introduced into the human field of economics, and gradually formed a new and important branch of economics-behavioral economics. Overconfidence as ubiquitous irrational psychological factors, from the beginning of the birth of behavioral economics has become the focus of academic researchIn business management, as a way to get the EPP, investment has been the core of corporate finance activities in companies, and the quality level of it has an important impact on the survival and development of enterprise, so scholars have never stopped their studies. In the1970s, based on the assumption of rational man theory, the agency theory and the asymmetric information theory did a detailed explanation of behavior on investment managers, so these two theories is also regarded as a classic. With the rise of behavioral economics, more and more researchers began to use behavioral economics to explain the investment behavior. The study found that while policy makers in making investment decisions, the economic interests just one of the factors affecting their decision-making when subjective psychological factors also play an important influence decisions which affect investment decisions overconfidence is subjective psychological factors one.In this paper, the author summarizes the results of the previous theory and research, and puts forward a hypothesis in line with China’s national conditions, and the measure of overconfidence also made appropriate improvements. The selected sample of data objects between2010-2012, China’s stock market listed companies in the manufacturing sector, through the sample descriptive analysis, correlation analysis, multiple regression analysis to analyze how far, robustness analysis, to establish an empirical model validate assumptions to explore managerial overconfidence on corporate investment relationship. Through empirical analysis, we draw the relevant conclusions:1. The more confident over the manager, his strong desire to invest more;2. The more over-confident managers, asset-liability ratio of listed companies higher.3. The more over-confident managers, the lower the return on investment of listed companies. Finally, the paper also put forward specific proposals, including improving the independent director system, strengthening internal incentive mechanism, and improving internal and external management.From the perspective of behavioral economics to study the impact of overconfidence on corporate investment, and provided some suggestion to supervise and guide the managerial overconfidence degree of influence on business decisions to minimize provided.