The Impact Of Managerial Overconfidence On Cash Dividend Policy

Dividend policy as one of the three company financial activities, continues the investing activities and financing activities, and reflect the results of the company’s activities. Reasonable dividend policy can mobilize the enthusiasm of investors, impact company’s investment and financing activities and maximize the company value. It has been risen the study of the dividend policy since 1850s.How to develop a reasonable dividend payout policy is the important subject of foreign scholars and the subject of research on theoretical analysis and empirical studies have established a complete system. Because the traditional theory can not reasonably explain dividend visions of emerging market, it is necessary to explore new research perspective to explain the dividend distribution policy. With the gradual study of psychology, it has born the behavioral corporate finance theory, and it provides a new perspective for us to explain the anomalies of stock market. The theory abandons the traditional assumptions about the theory of rational economic man, and introduce the cognitive biases of market participants.lt studies the impact of non-rational behavior of decision makers and the company’s dividend policy from a financial point of view. Since the securities market of China started lately, and the market is not perfect and normal. There are many factors that make managers are very overconfident. They make irrational financial decisions, thus affecting the changes in value of the company.This paper studies the impact of the dividend policy and the managerial overconfidence,and we find that the impact of the manager’s overconfidence on dividend policy will have changed in the perspective of corporate governance.Based on this article, we collected the data of 2010-2012 companies of A shares listed on the Shanghai Stock Exchange as samples.By using the literature, theoretical analysis and empirical research, we explore the relationship between company’s dividend distribution policy and managerial overconfidence. We establish a model between management overconfidence and dividends policy by introducing the measure variable of corporate governance,to study whether the corporate governance can mitigate the impact of irrational behavior of managers produced for the dividend payment.The empirical study found that overconfident managers are prone to release less dividends; the shareholding structure of corporate governance can alleviate the negative impact of dividend payments produced by managerial overconfidence; board size can not alleviate the negative impact of dividend payments produced by managerial overconfidence significantly.Finally, the policy proposals can promote China’s securities market develop normally and healthily. It also has important practical and significance theoretical.