Research On The Effect Of Risk Preference Of Managers To The Working Capital Policy

Working capital policy as one of the four key financial policies of listed companies, it is the key module of short-term corporate financial management, corporate'success or failure is closely related of it. Successful working capital policy can promote the development of the enterprise and enhance the market value of the business. In the choice of working capital policy, the companies always have steady, aggressive and moderate three types. Behind the business working capital policy type selected, managers' consideration of benefits, liquidity in particular risk preference is implied. As a helm of enterprise, managers control decision-making power, they have the ultimate, the most important impact on the business of working capital policy. Meanwhile, in the real economy field, the irrational policy of working capital case based on the characteristics of business managers risk preference caused after another. Therefore, how to set managers risk preference factor and then establish the model of managers risk preference to business working capital policy are significant.Based on the existing risk preference and working capital theory, we study the influence mechanism between risk preferences of managers and enterprises working capital policy, and by testing the relationship between risk preference and business working capital policy, we explore how to control and adjust managers risk preference to optimize enterprise working capital policy level.This paper selects Shanghai and Shenzhen A-share listed companies as research subjects, the 2010-2014 listed company samples are studied. The managers'risk preference is measured by the ratio of managers' risk assets to total assets, and we select the proportion of liquid assets as business working capital proxy variable to reveal the impact of managers'risk preference on working capital investment policy; We select the proportion of current liabilities as working capital proxy variable to reveal the impact of managers'risk preference on working capital financing policy. Through descriptive statistical analysis, multiple regression analysis and robust test methods, we test the relationship between these variables.The results of the study are as follows:First, managers'wealth, age, term of office and the highest education characteristics can effectively reveal their risk preference feature.Second, there is a positive correlation between managers'risk preference and firm working capital.Last, the size of enterprises, the actual controller' economic nature of the enterprise, as well as the company's asset liability ratio and other factors, have impact on the working capital policy level of the enterprise.Based on the above findings, we propose the following policy recommendations:First, managers should concern about their own risk preference feature in the development of enterprise policies, so as to make more objective and correct business decisions. At the same time, in the selection of managers, enterprises need to consider their wealth, age, term of office and the highest education characteristics, in order to select suitable management personnel who adapt their business development goal.Second, enterprises should improve the corporate governance mechanism, try to form a sound business decision-making procedures to prevent personal risk preference from dominating irrational enterprise working capital policy.