Research On The Influence Of Managerial Overconfidence On Enterprise Risk Based On Political Connection

Rapidly changing economic environment make the enterprise faced with increasing risk factors, in order to survive in the increasingly complex environment, enterprise must manage risk actively. Past researches on enterprise risk were more in technical level discussing about the influence of objective factors, ignoring the influence of manager-subjective factor behind decision. As the leader of enterprise, manager play a leading role in enterprise risk management, their psychological deviation have an important impact on it. So by affecting enterprise risk management what kind of influence does managerial overconfidence bring to enterprise risk level? Political connection is a political tool which enterprise used to transform environment to obtain more resources. Then combined managers'irrational psychological, how does the resources obtained by political connection affect enterprise risk management, and then what kind of impact will be brought to enterprise risk?Based on the above issues, the article takes A-share listed companies of Shanghai and Shenzhen Stock Exchange in 2010-2014 as the research object, combining theoretical analysis and empirical test, researching the influence of managerial overconfidence on enterprise risk, and the moderating effect of political connection on their relationship. The result showed that managerial overconfidence have a significant positive relationship with enterprise risk; and political connection have a significant positive moderating effect on their relationship. The further study also found that political connection made by NPC deputies and CPPCC members have significant positive moderating effect, while political connection made by government officials has no significant effect; compared with state-owned enterprises, political connection in non-state enterprises have more-significant positive moderating effect.According to the research result, the article puts forward concrete suggestions from four aspects:reduce the managerial overconfidence deviation, improve enterprise risk management system, deepen the reform of state-owned enterprises and accelerate the construction of market economic system, change the business philosophy of non-state enterprises, helping enterprise select suitable manager, improve risk management system and form correct treatment to political connection.