A Study On The Influence Of Manager 's Overconfidence On The Dynamic Adjustment Of Capital Structure

Modern capital structure theory indicates that the capital structure plays a vital role in corporate governance. There are many factors that affect the company’s capital structure. Research about that is divided into static capital structure and dynamic capital structure. In recent years, the study of dynamic capital structure has become an important field of the research about capital structure. Domestic study on dynamic capital structure has became mature gradually. However, it’s mainly concentrated on two aspects of the external environment and internal features, and less on the perspective of managerial overconfidence.Meanwhile, the studies from this point of literature are mostly for static analysis of the capital structure, without taking the dynamic changes into account. Therefore, from behavioral finance and corporate finance two angles, this article investigates the effect of managerial overconfidence on the speed of company’s capital structure adjustment and extent of deviations. What’s more, under different debt levels, this paper does further research.Firstly, the author tries to re-understand the effects of managerial overconfidence on capital structure adjustment, teased up the capital structure theory, behavioral finance theory in this paper, and established the theoretical basis of empirical research.Secondly, through the panel data, the paper makes an empirical analysis to verify the effects of managerial overconfidence on the dynamic adjustment of capital structure, and further analyzes whether the impact will change under different debt levels. The empirical results show that:(1) From the perspective of capital structure adjustment speed, managerial overconfidence recapitalization will reduce the power to adjust capital structure, and lowers capital structure adjustment speed.(2) From the perspective of degree of deviation from the optimal capital structure, managerial overconfidence will expand the distance between actual capital structure and the target one.(3) From the perspective of different debt levels, impact of managerial overconfidence on capital structure adjustment speed is more significant; impact on the degree of deviation varied. When liability is inadequate, its impact on the degree of deviation is more significant, and when the perspective of excessive, its impact is not significant.Finally, according to the actual situation in our country that the shareholding is relatively dispersed; information is asymmetric; incentive mechanism is not comprehensive; capital market oversight mechanism is underdeveloped, for the listed company to further improve financial management, and optimize debt policy, this paper presents some policies and recommendations.