Study Of Manager Overconfidence’s Influence On Cash Dividends Policy In Chinese Listed Companies

The discussion on the dividend policy is one of the three core content of modern financial activities. In the 1980s, with the rise of behavior finance, some scholars began to ease conditions and tried to make the psychological characteristics of decision makers make decisions as the variable to research the problems in the capital market. In the many irrational behaviour of company’s manager, overconfidence is one of the most prominent.This article selects 2005-2011 of non-financial insurance companies listed in SSE and SZSE which only issue A shares of listed companies (excluding ST and * ST, S * ST shares) as samples. Then, using principal component analysis to synthesize manager shareholding, manager relative compensation ratio, the number of company mergers and acquisitions and business climate index Which are the four commonly measure index of manager overconfidence as a new measure index of manager overconfidence. Finally, introducing the Probit regression model to research the influence of manager overconfidence on cash dividend policy of Chinese listed companies.Experimental results show that:overconfident psychological preferences of managers would have a positive impact on the company’s cash dividend distribution; company profitability and company size have positive correlation with company cash dividend, while company potential development opportunities has no significant correlation with it;nearly half of the companies in the research sample distribute cash dividend and different companies are vary in company potential development opportunities, company profitability and company size.The research of manager overconfidence’s influence on cash dividend distribution in Chinese Listed Companies has important theoretical and realistic significance.In the background of many scholars at home and abroad using single index to measure manager overconfidence, this article attempts to synthesize a new proxy variable to measure manager overconfidence that provides a new reference way of choosing proxy index of manager overconfidence. And, using a new proxy index of manager overconfidence to study the manager overconfidence’s influence on cash dividend policy in Chinese listed companies, also enriched the behavioral corporate finance research concerning the dividend policy. In the real decision, this paper will not only be helpful to the application of the relevant knowledge of behavioral corporate finance and psychology to guide the company financial decisions, but also play a role in promoting the company attaches great importance to the equity incentive system for manager role of incentive and constraint.