Research On The Impact Of Managers' Overconfidence On Financial Resilience

Financial flexibility reflects the ability of companies to obtain funds when they are in crisis or encounter good investment opportunities.It is an important indicator for enterprises to respond quickly to market changes.It is receiving more and more attention and research.Therefore,the maintenance of financial flexibility strategy is of great significance to the development of enterprises.The maintenance of corporate financial flexibility is not only affected by the financial status and development level of the enterprise,but also by the personal ability and psychological characteristics of the enterprise manager.Traditional economic research is based on the assumption of “rational people” and does not take into account the individual perceptions and behavioral biases of corporate managers.With the emergence and development of behavioral finance,more and more scholars have integrated psychology and behavioral science into the study of financial issues,making research more valuable and practical.Therefore,on this basis,this paper combines the manager's overconfident irrational behavior with financial flexibility to explore the direct impact of managerial overconfidence on financial flexibility.This paper mainly studies the related literatures at home and abroad,and based on relevant theories such as behavioral finance and financial management,mainly studies the following issues:(1)The relationship between managerial overconfidence and financial flexibility;(2)In the non-state-owned enterprises,the overconfidence of managers is more significant than the state-owned enterprises' financial flexibility,and they are all significantly negatively related;(3)Managerial overconfidence is significantly negatively correlated with financial flexibility in competitive enterprises,and there is no significant significant relationship among non-competitive enterprises.This paper takes 2012-2016 as the sample research interval,selects the A-share non-financial listed companies in China as the empirical sample,and the manager's personal characteristic score is greater than or equal to four,which is the manager's overconfidence,and the financial elasticity comprehensive index as the financial flexibility,and the manager's relative salary ratio is used as a measure of manager's overconfidence to conduct a robust test..Descriptive statistics,correlation tests,fixedeffect regression,and robustness tests were performed using SPASS and STATA software,and the following conclusions were obtained:(1)Managers' overconfidence is significantly negatively correlated with financial resilience,ie managers' overconfidence will maintain relatively low financial resilience compared to nonoverconfident companies;(2)In non-state-owned enterprises,managerial overconfidence is significantly negatively correlated with financial flexibility,and there is no significant significant relationship among state-owned enterprises.(3)In competitive enterprises,managerial overconfidence is significantly negatively correlated with financial flexibility,and there is no significant relationship in noncompetitive enterprises.The research conclusions deepen the understanding of the consequences of managers' overconfidence and provide a new perspective for studying financial flexibility.The research results show that it is necessary to strengthen the internal control structure of corporate governance,so that the management of managers is carried out under the supervision of compliance,in line with the development strategy of the enterprise,and minimize the impact of managerial irrational behavior on the company's development.Enterprise managers should also strengthen their own learning,and improve their rational judgment ability in learning exchanges.At the same time,external expert opinions will make managers' behaviors get rational suggestions.In the end,enterprises can only make up for their own competitiveness and make up for the negative effects of overconfidence and irrational behavior.