The Effect Of Managerial Overconfidence On Corporate Financingstrategy And Performance

At present,mergers and acquisitions of private listed companies is more and more frequent,and the scale of mergers and acquisitions is also showing a rising trend.When the private listed companies carry out large?scale mergers and acquisitions,corporate finance will become a important part that can not be ignored which has a serious influence to the result of mergers and acquisitions of enterprises.So the research on financing strategy of private listed companies,studying the important factors which has a influence on financing decision of private listed companies,which is good for improve the success rate of corporate mergers and acquisitions,has very important significance to increase the performance of merger and acquisition.There are many factors that affect the private listed company financing decision,the influence of human factors is very important.Because the enterprise financing decision is made by the management,the non rational behavior of the management will have a significant impact on the enterprise financing decision.So this paper abandons the traditional finance on "rational person" hypothesis,studying from the perspective of behavioral finance research of managerial overconfidence on private listed companies financing decision and performance.Among some the classical theories of capital structure,the development of the pecking order theory is relatively mature.Foreign scholars' research about the pecking order theory are also in line with the characteristics of the foreign capital market.But as the development of country,the China capital market system is not perfect,the financing channel is not smooth,and the disclosure of the enterprise information is not transparent.These reasons caused the financing decision of the private listed company may be different from foreign enterprises.So whether the financing decision of Chinese private listed companies accord with the pecking order theory?This paper is to verify whether the M&A financing decision is consistent with the pecking order theory.When the managers of private listed company managers is overconfidence,the irrational behavior of managers will produce what kind of impact on the corporate financing decision.When there is a capital gap in the enterprise,managers overconfidence on the M&A financing decisions will have what kind of impact,when the enterprise's own funds sufficient,managerial overconfidence will produce what kind of impact on the enterprise financing decision?Overconfident managers will have an impact on the corporate financing decision,and the different financing decisions will lead to different financial risk and the cost of capital,so overconfidence of management on private listed companies in the final performance of mergers and acquisitions will produce what effect?In order to clarify the above problems,this paper through empirical research study the impact of managerial overconfidence on corporate financing decision.Selecting a sample of mergers and acquisitions.of private listed companies case during 2010-2015,with the enterprise earnings forecast error as a measure of corporate overconfidence,drawing the following conclusions,The private listed companies of Chinese in the process of mergers and acquisitions financing decision does not comply with the pecking order decision;Enterprises in mergers and acquisitions tend to debt financing;And when funding gap exists in private listed companies,corporate managers which are overconfidence are in favor of debt financing;When private listed companies capital adequacy,managers still tend to debt financing,but the manager's overconfidence can inhibition of corporate preferences on debt financing.In order to study the effect of overconfidence on enterprise merger performance,this paper again chooses the mergers and acquisitions case of private listed company during 2010-2014 as samples,the empirical results show that there is a significant negative correlation between managerial overconfidence and M&A performance of private listed companies.And,when there is a gap in the private listed companies,managers'overconfidence has a greater negative impact on the performance of mergers and acquisitions.When the private listed companies have sufficient funds,the influence of managers' confidence on the performance of mergers and acquisitions will be relatively smallIt can be seen that managers overconfidence has a significant impact on M&A financing decisions and performance of private listed companies.Finally,according to the conclusions of empirical research,this paper puts forward that the enterprise managers should improve the understanding of managers' overconfidence and try to eliminate the over confidence of managers.Shareholders and managers can establish appropriate financing decision-making process,to maximize the elimination of corporate managers overconfidence on the M&A financing decisions and M&A performance.