Research On The Formation Mechanism And Economic Consequences Of Corporate Financial Distress Under CEO Overconfidenc

Traditional economic theory models set up CEOs as economically rational and make behavioral decisions with the goal of maximizing firm value.In reality,CEOs are not entirely rational,and overconfidence is the most common psychological bias of CEOs that may lead to anomalies in existing traditional theories and models.With the development of modern society,more and more companies use social capital to obtain the core resources they need and enhance the feasibility of their value realization,but in the actual process,insufficient feasibility analysis,market variability and information redundancy make major mistakes in behavioral decisions,and under the role of unclear positioning of the CEO and other executives themselves,resulting in management making wrong behavioral decisions and Blind investment and over-funding,which lead to financial dilemma.Therefore,it is important to clarify the mechanism and economic consequences of CEO overconfidence on financial distress to ensure sustainable corporate development.Based on the analysis of social network embedding theory and higher echelon theory,this thesis uses literature research method and case study method to construct a mechanism framework of "characteristic-behavior-outcome",selects Evergrande Group as a case,adopts self-interest attribution method,M&A behavior method and profit forecast deviation method to analyze the financial distress caused by CEO overconfidence of Evergrande,and proposes specific management measures.Through the study,it is found that(1)the poor use of government social capital,financial social capital and supplier social capital triggered Evergrande CEO’s overconfidence;(2)The overconfidence of Evergrande’s CEO triggered its blind investment and overfunding,which eventually led to serious financial dilemma and the alleviation of debt pressure through the sale of properties for repayment,asset disposal and debt treatment;(3)Evergrande’s financial dilemma have triggered a series of adverse economic consequences,both for the enterprise itself and its stakeholders(creditors,investors,consumers,other enterprises and industries in the industry chain);(4)the financial dilemma of real estate enterprises can be restrained by contractual constraints(institutional constraints,financial market and capital market)and relational constraints(interests related to the enterprise itself,government,upstream and downstream enterprises,media and the public)to curb the overconfidence of the CEO,safeguard the soundness of corporate investments and prevent possible financial dilemma.Possible innovations of this thesis are:(1)the scientific nature of the research method.This thesis conducts a deep excavation of Evergrande Group’s executive network and social capital,translates the information into concepts and dimensions,measures executive overconfidence and social capital,and provides a quantitative basis for the governance of financial distress and corporate value realization;(2)Innovation of research perspective.This thesis deeply analyzes the coupling between the psychological attributes of Evergrande Group CEO and corporate distress from the perspective of a single case.