A Research On Manager Overconfidence Impacting On Cash Dividend Policy In Listed Companies

As one of listed company’s major financial decisions,the dividend distributionpolicies not only affect the present benefit of existing shareholders,but also affectfinancing and investment decisions in the future,and enterprise value. It has alwaysbeen a hotspots in theoretic and practical circle. As the MM theory established,theresearchers began to study the dividend distribution policies to a deeper level. Perfectmarket hypothesis put forward is based on rational behavior of investors. Rationalinvestors are always able to handle all available information,so as to make the rightdecision to maximize the expected utility,form balanced expected earnings. The stockmarket,however,there are abnormal phenomena that can’t use the traditional financialtheory and research model explain because of the basis of perfect market hypothesis.Roll bring forward a concept of manager overconfidence in financial theory first timein1986. He combine the corporate financial with psychology in research form theemerging theory of behavioral finance.This paper,based on the perspective of behavioral finance theory,to broaden therational economic man hypothesis in the traditional financial theory that introduce thefactor of overconfidence into the cash dividend distribution polices’ makingprocess,to examine how manager overconfidence impact on cash dividend distributionpolicy of listed companies. At the same time to join the corporate governancefactors,to study how the mechanism work between manager overconfidence and thecash dividend distribution.I set up a basic model between manager overconfidence and the cash dividenddistribution policy at first in the empirical part. Then combine the first big shareholdershareholding,the proportions of the independent directors and executives shares withmanager overconfidence. At last,by using the Stata11.0statistical software,I did thedescriptive statistics analysis,multiple regression analysis and Logit regressionanalysis and robustness testing with sample from2008to2012. The results show thatthe manager overconfidence and the cash dividend policy of listed companies hassignificantly negative correlation relationship as it is respected. And the first bigshareholders and independent directors did not play a role of the correspondingpositive,failed to timely corrective actions of the manager’s irrationality. But theempirical results also confirmed that equity incentive mechanism plays a positive rolebetween overconfidence and cash dividend,it can restrain the impact ofoverconfidence in cash dividend polices.