Research On The Relationship Between Managerial Overconfidence And Stock Price Crash Risk

Since the establishment of the Shenzhen Stock Exchange and the Shanghai Stock Exchange in 1990,my country’s stock market has experienced ups and downs for more than30 years,and the stock market has gradually become an important part of the capital market.However,as my country’s stock market has not yet been perfected,the system has yet to be perfected,and investors’ investment ideas are relatively immature.In this case,individual stocks often fluctuate greatly,and investors also chase up and down,resulting in frequent stock price crashes.Traditional financial theories fail to perfectly explain the abnormal fluctuations in the stock market because they do not consider irrational factors,while behavioral finance theory takes irrational factors into account,thus providing a new way to explain the phenomenon of stock price crashes.From the perspective of behavioral finance,the economic man in the market is no longer completely rational,but limited rationality.For the managers of enterprises,their personal characteristics such as educational background,cultural background,gender and age will make their judgments biased and lead to wrong decisions.The psychological trait of corporate managers’ overconfidence has a relatively close relationship with the risk of stock price crash.Most of the current research is to directly prove that the overconfidence of corporate managers will lead to the collapse of stock prices,but lack of research on its internal impact.By introducing the intermediary variable of excessive debt,the three variables of managerial overconfidence,excessive debt and stock price crash risk are placed in a logical framework.The effect of overconfidence of managers on stock price crash risk and the degree of over-debt on the mediating effect of the two are empirically tested,which proves that when corporate managers are overconfident,there will be a higher probability of crash risk,and the two are positive Correlation;if corporate managers have overconfidence,they will deepen their degree of over-indebtedness,and the two are positively correlated;over-indebtedness plays an intermediary role between corporate managers’ overconfidence and stock price crash risk,further deepening stock price crash risk.Further analysis shows that state-owned enterprises can reduce the degree of overconfidence of managers compared with private enterprises due to stricter supervision measures on enterprise managers,thereby reducing the excessive debt and the risk of stock price collapse.According to the empirical results,it is suggested to improve the team building of managers and build a benign governance system;improve the assessment system of managers to avoid wrong decision-making by managers;improve the internal control of enterprises and establish an early warning mechanism for enterprise leverage;improve the information disclosure system and increase the transparency of information disclosure.