Executive Overconfidence And Capital Structure Choice

For a long time,small and medium enterprises in our country has always played an important role in the economic system,to promote employment,tax contribution to an important force,but also to improve industrial categories,technical improvements and innovation practice of force.However,the current situation of the survival and development of Chinese SMEs is still not optimistic,and.one of the reasons is the"financial difficulties" faced by SMEs in general.As China's financial system is still under construction to improve,the more the lack of support services for SMEs financing,combined with the presence of SMEs themselves asset size is small,poor ability to withstand risks and other issues,making the financing channels for SMEs is limited,financing environment improve slowly.It has become a hot issue of common concern practice and academia that how SMEs choose a capital structure in order to achieve healthy development.As a senior manager corporate strategic direction setters and financing decisions,capital structre directly determines the selection policy.However,the traditional capital structure theory emphasizes rational man hypothesis,while ignoring the personal qualities for senior managers of Capital Structure Choice.In fact,because executives have more internal situation,while others have extensive management experience,which is not completely rational decision making,but more close to a state of overconfidence.With the development of behavioral finance theory,more and more scholars began to notice executive overconfidence for corporate financing decisions.For SMEs,the choice of financing decisions are often directly related to the survival of enterprises,will be more dependent on the executive management experience and judge the situation,executives are more likely to suffer non-rational state,in particular the impact of overconfidence.However,the current domestic existing executive overconfidence and corporate capital structure literature mostly targeted large public companies while SMEs lack the more targeted research.Therefore,it has a positive theoretical and practical significance for SMEs to explore business executive overconfidence and capital structure influence,which helps in-depth analysis of the financing problem of SMEs and promote their rapid and healthy development.This paper selects 2011--2014,China's GEM SME as research subjects,using a relative measure of executive remuneration overconfidence situation,using the asset-liability ratio,short-term debt ratio,the ratio of long-term debt and bank loan ratios measure capital structure choice situation using descriptive statistics,correlation analysis,regression analysis and other methods to examine the relationship between executive overconfidence and the empirical choice of capital structure under the GEM executives market conditions,and the results of a series of empirical robustness check.The empirical results show that:under the GEM market conditions and is proportional to the executive overconfidence short-term asset-liability ratio and debt ratio and inversely proportional to the ratio of long-term debt and bank loan ratio.The conclusion helps to enrich the existing literature executive overconfidence,but also to study the factors of capital structure of SMEs provides empirical data.