Overconfidence Of Managers And The Impact Of Debt Financing On Corporate Value

Early financial theory assumed that financial markets were completely effective,and individuals could avoid risks and maximize the effectiveness of decision-making in a completely rational situation.However,in the 1980 s,many visions appeared,and early financial theory could not reasonably explain them.Therefore,some financial scientists began to try to combine psychology with financial theory to explain these phenomena and lay the theory of behavioral finance begin.Behavioral finance research shows that people’s actual decision-making behavior is not completely rational,and investors may have irrational psychological characteristics of overconfidence.Managers in enterprises can make decisions on the daily business activities and major co-ordination policies of enterprises.If managers have excessive self-confidence,they may make many irrational behaviors that affect the survival and development of enterprises.In view of the overconfidence of managers,foreign countries have to be earlier than domestic ones.In recent years,Chinese scholars have begun to study the psychological characteristics of managers’ overconfidence,and the number of studies is insufficient.This paper introduces the debt financing variable to explore the mechanism of the relationship between managerial overconfidence and corporate value.That is to say,from the manager’s overconfidence affecting corporate debt financing,and then through the logical path of debt financing affecting corporate value,explore the impact of managerial overconfidence and debt financing on corporate value.It not only increases the research on managerial overconfidence in the number of research,but also helps us to correctly understand the manager’s overconfidence and can choose the decision that can improve the value of the enterprise in different financing decisions.The main content of this article is as follows: The first part introduces the research background and significance of this article,the research method,content and innovation of the article.The second part reviews and summarizes domestic and foreign literature on managerial overconfidence,debt financing,and corporate value.The third part,based on behavioral finance theory,agency cost theory,signal transmission theory,and order financing theory,explores how managers’ overconfidence affects corporate value and what factors play a role in it,and debt financing Whether it can play an intermediary role and the mechanism by which it can play a role.Then put forward 4 hypotheses,namely: H1:Managers ’overconfidence and negative correlation between enterprise value,H2:Managers’ overconfidence and positive correlation between debt financing,H3: Liability financing and negative correlation between enterprise value,H4: Liability Financing is an intermediary variable between managers’ overconfidence and corporate value.The fourthpart is research design.Select appropriate indicators to define each variable and establish a model related to it.The fifth part is empirical test.First,perform descriptive statistics and correlation analysis on the previously collected data to check whether there is multicollinearity.This is the prerequisite for the next regression.Then,regression analysis is performed to determine whether the relationship between all variables is consistent with the hypothesis.The final step is to test the robustness of the data to see if the results of this study are reliable.The sixth part is research conclusions and recommendations.Based on the results of empirical analysis,the research conclusions are drawn,and suggestions for solving the problems are put forward based on the actual situation of the market,and the shortcomings of the research are also pointed out.