Large Shareholder Ownership, Manager Overconfidence And Financial Asset Holding Scale

In recent years,China’s economy is in the period of transition.Great changes have taken place.The high-profile phenomenon in this critical stage is the non-coordinated development between the real economy and financial field.Because of the heavy tax burden,rising costs and overcapacity,the real economy’s profit is a sharp decline and there are new bankruptcies in China.In contrast with the real economy,the financial field appears excessive inflation.The development of financial industry is very rapid.Its yields rise faster and faster.Non-financial listed companies put more and more money into financial assets.It forms the separation of between finance and entity economy.The real economy is the foundation of the national economy and the financial industry should serve the real economy.So this change has a complex and profound influence on our country’s economy.It may provoke social contradictions as a more serious consequence.Under the current situation,which we study the influential factors of enterprise’ financial assets scale can enhance the ability of enterprises’ capital management,optimize the capital structure and promote the sustainable development of enterprises.Most studies on enterprises’ investment behavior at home and abroad are based on rational assumptions.That is to say,decision-making managers have homogeneity.However,managers are disturbed by many factors in decision-making,and all is not rational.The irrational characteristics may affect the enterprise’s investment decision-making behavior.It can make traditional theory of governance mechanism disable.Which managers’ psychological factors are introduced into the company’s investment research is necessary.Overconfidence is a representative of the non-rational psychology that influences on non-financial enterprises’ financial assets scale.It can provide the reference for the management of enterprises’ investment in financial assets.Based on the existing literature and theoretical research at home and abroad,this paper puts forward the hypothesis and related model according to the theoretical analysis and the related institutional and realistic background,and then using the data from 2010-2015 of China’s non-financial listed companies to study the relationship between managerial overconfidence,large shareholder control and financial asset holdings of non-financial listed companies.The conclusion of empirical analysis show that:(1)Managerial overconfidence is significantly and positively related to financial asset holdings of non-financial listed companies.(2)Large shareholder control is significantly and negatively related to financial asset holdings of non-financial listed companies.(3)When a enterprise manager is overconfidence,large shareholder control doesn’t have the effect of effective governance.According to these findings,this article shows some suggestions on how to control the excessive financial investment behavior of non-financial listed companies,including to reconstruction of the financial and real economy relations,strengthen the non-financial listed company regulatory constraints,establish and improve the professional manager market,reasonable control the scale of investment in financial products,set up scientific executive overconfidence learning mechanism and early warning indicators,perfect the corporate governance mechanism.