Study On The Mechanism Of How Managers' Psychological Biases Cause Corporate Irrational Investment

The corporate investment is not only the stanchion of the economic growth but also improve the people's life quality, It create value for stockholders too. However, there is existed inefficient-investment which makes waste of the social resources. Based on the hypothesis of Economic Man and Rational Man, there are many researches on this phenomenon conducted by scholars, but they could not just give all the explanation. So it is sense to study corporates'inefficient-investment by manager psychological and behavioral bias.High-level managers play a important roal in corporate investment. And their psychological processes have been impact on investment. We analysis the mechanism of Manager psychology bias on corporation inefficient-investment. The managers'overconfidence and envy based on the comparison of compensation cause the corporate over-investment. Managers'myopia which caused by limited attention, Managers' herd behavior which arouse from the economizing cost of information collecting and the shirking of responsibility,that will lead to the corporate disorder diversification investment. Because of the manager's confirmatory bias, loss aversion and regret aversion, it lead to corporate escalation of commitment. These investments will ultimately make a corporate loss its core competition and fall into financial collapse and manage chaos. These losses of the corporation value caused by inefficient investment are named as behavioral cost.We analysis the methods to measure managers' psychology and irrational corporate investment by other researchers. The news analysis is the better methods to measure managers' psychological bias. We use the news analysis method to measure the overconfidence of manager,We also use the increase of attation to hot news to measure manager myopia, We use colony's the same change attention to hot news to measure manager's herd behaviour. And also we take NEW HOPE and Liu Yonghao as the representative of the team managers to test these methods. Meanwhile, we analyse and appraise the irrational of corporate investment which is caused by manager's psychology and behaviour bias.By the monkey psychology and equity theory. We use compensation gap as manager envy. We find the manager envy which is caused by manager's compensation gap play a important role in corporate investment. Which explains the relationship between the contest of manager salary and the competition of corporate investment.In view of the irrational stock market, we introduce some related methods to analyse the manager myopia. We analyse the influence which manager myopia caused by Limited attention and investors myopia lead to the more irrational stock investment of manufacturing companies. Accordingly, it gives a explanation on the disorder investment of our campany.In order to lessen the cost of manager's psychological bias, we should enhance the managers' quality, design a rational system and perfect the financial market,etc. Thus, we can control the influence of managers'irrational behaviour in the corporate investment decision-making.