Research On The Influence Of Managerial Overconfidence And Investor Sentiment On Equity Financing Cost

Financing cost is the main factor that enterprises consider when financing,and it is also an important part of financing decision-making.Financing cost plays a very important role in the investment and financing decision-making of enterprises.Therefore,exploring the factors affecting the financing cost of enterprises has always been a hot topic in the field of economic finance and corporate finance.Especially,in the Chinese market,the theory of "preferred financing order" fails,and most enterprises have strong preference for equity financing.Therefore,it is necessary to analyze the factors affecting the cost of equity financing in depth.However,at present,most of the studies on the influencing factors of equity financing cost are based on the theory of "market efficiency" and the hypothesis of "rational person".The relevant empirical studies focus on the financial and macroeconomic situation of enterprises,and do not take into account the large number of irrational behaviors in the Chinese market.Therefore,this paper attempts to break the "rational person" hypothesis,based on the theory of behavioral finance,to take Managerial Overconfidence and investor sentiment into account,and to explore the factors affecting the cost of equity financing more deeply.Based on the relevant data of Shanghai and Shenzhen stock markets from 2010 to 2014 and theoretical analysis,this paper makes an empirical study on the impact of Managerial Overconfidence and investor sentiment on the cost of equity financing,and puts forward relevant suggestions.The results of this study show that investor sentiment is negatively correlated with the cost of equity financing;Managerial Overconfidence is positively correlated with the cost of equity financing;and there is a certain contagion mechanism between Managerial Overconfidence and investor sentiment,.And under different investor sentiment states,managers' overconfidence has different effects on equity financing costs.