Managers Overconfidence,Cash Dividends And Overinvestment

Since the forty years of reform and opening up,investment as one of the "three carriages" has been driving China's rapid economic growth.Microscopically,the investment behavior of enterprises also provides impetus for the rapid growth of enterprises.After China's economy has entered a new normal situation,China enterprises are facing various new opportunities and challenges.How to improve the efficiency of investment has become the key to the next development fast lane.However,for a long time,the problem of inefficiency investment has always existed and plagued the development of enterprises.The agency theory and information asymmetry theory believe that the ownership structure,corporate governance and external competition will cause the inefficiency investment of the company.In view of the investment efficiency,scholars at home and abroad have carried out a large number of theoretical and empirical studies on the basis of the traditional finance theory,but lack the consideration of the overconfidence of cognitive bias in behavioral finance.Management is deeply influenced by psychological factors in making investment decisions,which makes it necessary to study the overconfidence of behavioral finance in the study of investment efficiency.Due to the comprehensive influence of various factors and the rise of the capital market since the reform and opening up,the research of dividend policy in China has begun,and the research field has been limited.According to the signal theory,cash dividend payment can be used as a stable cash flow and a good signal for investors to enhance their value.Therefore,the dividend policy of the enterprise is closely concerned by the parties including the regulators,the domestic scholars and the external investors,which is the subject of this article.In addition,excessive free cash flow in enterprises can easily lead to excessive investment,and cash dividend is a favorable tool to reduce agency cost and strengthen external supervision in our corporate governance.It can effectively reduce the free cash flow of enterprises,and then suppress excessive investment and optimize the allocation of resources.It is also worth our attention.Different from the past only consideration of information asymmetry theory and agency theory,this paper,from the perspective of behavioral finance of management overconfidence,selects the data of Chinese A shares listed companies for 2011-2015 years to study the problem of overinvestment.In terms of theoretical support,this paper uses agency theory,information asymmetry theory,dividend theory and behavioral finance theory,and puts forward two hypotheses: H1: under other conditions,there is a positive correlation between overconfidence in management and overinvestment in the company;H2: in other conditions,cash Dividend payment can inhibit the influence of Managerial Overconfidence on overinvestment.On the aspect of variable measurement,this paper takes the management layer to overestimate the performance of the enterprise as a standard to measure the overconfidence of management.On the basis of many scholars' research,we use the model of Richardson's investment efficiency to measure the overinvestment behavior of the enterprise,and use the e of the model to judge whether the enterprise has an inefficiency investment.Capital and measure the degree of inefficient investment.When e is greater than 0,it shows that enterprises have excessive investment behavior,and the bigger the E,the more serious the problem of excessive investment.In addition,based on this,a regression model is built to analyze the impact of overconfidence on overinvestment.At the same time,in order to explore whether the corporate governance behavior of the dividend policy can effectively restrain the effect of overconfidence on overinvestment,the paper also introduces the cash dividend variable,and uses the management overconfidence variable and the cash dividend variable to analyze the effect of overinvestment,and to guarantee the management overdue.The reliability of the research results of trust,cash dividends and over investment was tested.Based on the results of theoretical analysis and empirical analysis of management overconfidence,cash dividend and overinvestment,this paper draws the following conclusions: first,there is management overconfidence in Listed Companies in China;second,overconfident enterprises with overconfidence in management are more prone to overinvestment behavior;third,cash dividends are issued.It can effectively inhibit the influence of Managerial Overconfidence on overinvestment.Finally,based on the background of China's current economic structure transformation,this paper puts forward some suggestions on how to improve the efficiency of the company's resource allocation,improve the corporate governance and ensure the steady and healthy development of the company,and rethinks the shortcomings of this study,and puts forward the future prospect on this basis.This paper introduces the cash dividend variable in the study of the influence of overconfidence of the enterprise manager on the investment decision of the company,and explores the relationship between the overconfidence of managers,the cash dividend and the overinvestment of the company,and finds the interaction between the overconfidence of the managers and the cash dividend on the Overinvestment,and enriches the related literature.It has a certain theoretical and practical significance.