A Study Of Managerial Overconfidence’s Influence On Corporate Financing Behavior

Financing behavior is the most basic financial activities of enterprises, many scholars studied the problem of enterprises’ basic structure with the classic MM theory, trade-off theory, agency theory, free cash flow hypothesis, control theory, the product competition theory and so on, But the most studies are based on the “hypothesis of rational man” which in real life was suspected. Enterprise managers in real life, however, as a natural person cannot be completely rational, as a result, these theories in real life have been questioned. In recent years, with the rise of behavioral finance, the company operating and behavioral finance theory formed and the studies, the managerial over-confidence impact on the financing behavioral, are gradually becoming one of the hot issues. Foreign scholars have accumulated abundant of literature, also produced a rich research achievements, but it is identified that the results of the literature are applicable to the situation of China’s capital market. Under the system of socialism with Chinese characteristics, therefore, study financing behavior impacted by the managerial overconfidence has very important significance on theoretical and practical.This paper first combs and reviews the related research of managerial overconfidence impacting on the corporate financing behavior, defines the concept of managerial overconfidence and financing behavior. Selecting the financing failure case of Fuji Corp. analysis the financial and capital structure of Fuji Corp., the concrete embodiment of managerial overconfidence in financing behavior and managerial overconfidence impact on corporate financing behavior, then discuss the causes of managerial overconfidence mood and put forward some improvement measures.In this paper, the research results show that overconfidence managers prefer debt financing, and affect the enterprise’s capital structure and debt maturity structure, namely the asset-liability ratio is higher with the overconfidence managers, and long-capitalization rate will also be on the high side, even higher than the usual dangerous level. So it is need to modify managerial overconfidence cognitive biases, restrain financial troubles caused by Managerial overconfidence.