Research On The Finacial Risk Of Letv From The Perspective Of Overconfidence Of Managers

In the process of enterprise development,due to the limited rational decision makers,the company's investment and financing decision is not always optimal,sometimes may be due to information asymmetry or manager itself the role of the personality characteristics and other factors,some decision results even damage enterprise value.Existing literature studies have found that the overconfidence in psychology is one of the main reasons for the irrational decision making of enterprise managers.Managers with overconfident traits are more likely to make aggressive and risky decisions that have a significant impact on corporate financial risk and risk response strategies.Based on the manager's overconfidence perspective,this article studies Letv 's investment behavior,financing behavior and earnings management behavior in order to reveal the impact of Letv's executive overconfidence on corporate financial risk management.This article first uses the fuzzy comprehensive evaluation method to evaluate Letv's 2016 financial risk rating,and discovers that Letv is facing a high level of financial risk.Authoritative literature studies have shown that male managers,young managers,and high-risk managers are more prone to overconfidence decision-making behavior.Jia Yueting,who is the chairman and CEO of the company,possesses the above characteristics.Regardless of the analysis of the company ' s development trajectory,development model,or organizational structure,Letv has a phenomenon in which Jia Yueting,the actual controller,“ is monopolized ”.Managerial overconfidence has a double-edged effect.In 2010-2013,Letv's net profit growth rate,roe,return on total assets and other indicators were all higher than the industry average,but 2014 was a hi storical turning point.From 2010 to 2016,Letv's annual operating income growth rate was 182.30%,which was obviously unsustainable.The funds required for high-speed growth mainly depend on bank liabilities,and the company's asset-liability ratio was 2 times the industry average.In 2012-2013,the actual operating income of Letv was less than the forecast level of securities analysts.In2014-2016,Letv glossed through the related transactions to cover the financial statements.The company' s actual income was RMB 931.365 million higher than the forecast of securities analysts.The combination of the above factors led to the fracture of the capital chain and eventually led the company into a financial crisis.This article puts forward some countermeasures a nd suggestions from the perspective of strategic positioning,internal management and selection of managers.the research value of this article is to analyze the influence of Letv managers overconfidence influence on corporate financial behavior,enrich th e case study in the field of managers overconfidence,also helps to reveal the traditional completely rational assumption that failed to find managers decision-making behaviors.