An Study On The Relationship Between Managerial Overconfidence And Capital Structure

The capture structure is the hot issue of domestic and foreign scholars, and the research has achieved great results after a long period. However, whether domestic or foreign studies are based on the assumption of rational economic person, the assumption that the market participants include managers and investors are always rational is still doubtful in the reality market. Behavioral finance theory holds that the individuals in market due to their feelings and emotional factors are irrational in many cases. Based on a behavioral finance perspective, the study researches whether overconfidence of manager's will influence the capital structure and explore the definite causal relationship between them.Based on behavioral finance research results, the article has make conclusions that manager's overconfidence will impact the capture structure mainly in the debt ratio and debt maturity composition trough an analysis of domestic and foreign research.In order to support the conclusions, this paper analyzed the sample including all the companies which issue A shares, the results proved the assumptions. There is the positive correction between the managers'overconfidence and the level of companies, the managers who are more overconfidence are more inclined to choose high leverage; there is the positive correction between the managers'overconfidence and the maturity of the debt, the managers who are more overconfidence are more inclined to choose the short term liability. This article also found that the positive correlation is more obvious when the cash flow is insufficient.By the above studies, the article enriches the behavioral finance theory, and makes the theory to be more effective for the research of the irrationality of managers. This article has a strong practical significance because of using the listed companies'data for analysis. The Author hopes that this article will be helpful to the development of China's capital market, and there will be researches about this area.