Managerial Overconfidence,Mispricing And Corporate Debt Decisions

Corporate financing decision-making is an important part of the company's financial decision-making,which determines the capital structure and corporate value of the company.Foreign scholars have relatively mature research on the choice of corporate financing methods and capital structure.The MM theory,which is the symbol of the modern capital structure theory,and the later developed trade-balance theory,the theory of capital structure such as the principle of financing,are based on the complete rational economic man.However,with the development of behavioral finance,more and more scholars are concerned that the irrational behavior of managers has a great impact on the company's financial decisions.Psychology believes that overconfidence is a relatively stable psychology.Therefore,more and more scholars at home and abroad pay attention to the impact of managerial overconfidence on financial decisions such as financing decisions and investment decisions.In the past,the research on corporate debt financing mainly focused on the internal objective factors affecting debt financing.As the decision makers of the company's business activities,what impact will the psychological deviations have on the financing decisions of enterprises?The mispricing belongs to the information of the market outside the company.Generally speaking,the overvalued stock price will reduce the cost of equity financing of the enterprise,and the enterprise will increase the equity financing.Then what effect will the wrong pricing have on the debt financing of the company?The stock price can also provide the managers of the market with the degree to which the investors in the market are optimistic about the company.The overvalued stock price conveys the investor sentiment of the stock market to the managers,which just supports the manager's overconfidence and intensifies management.The degree of overconfidence;on the contrary,the undervalued stock price weakens the degree of managerial overconfidence.So what is the impact of the manager's overconfidence and mispricing on the company's debt financing decisions?Based on the above problems,and based on the status quo of China's capital market,this paper takes A-share listed companies from 2006 to 2017 as the research object,and the change of executive stock holdings as a proxy variable for managers' overconfidence,using manipulated accruals as an error.The proxy variable of pricing,with company size,profitability,asset-liability ratio,monetary capital,net operating cash flow,and market-to-book ratio as control variables,is backed by the ordinary OLS method,and controls the annual effect and industry effect.Finally,the following conclusions are drawn:(1)Managers' overconfidence is positively related to the scale of debt financing,and this positive correlation is more important in non-state-owned enterprises;(2)Overconfident managers are more inclined than long-term debt financing.In short-term debt financing;(3)mispricing is positively related to corporate debt financing;(4)mispricing can enhance the positive correlation between managerial overconfidence and debt financing,but False pricing in state-owned enterprises does not enhance the positive relationship between managerial overconfidence and debt financing.