Research On The Impact Of Managerial Overconfidence On The Financial Structure Of Corporations

Financial structure has always been the hot issue of theories field.In the theorystudy of behavior, our country is in the initial stage, especially in the studies on therelationship between managerial overconfidence and the financial structure ofcorporations. The real estate industry has been an important and basic industry innational economy, it is related to people’s livelihood, and has deeply influenced thedevelopment of related industries. The real estate industry is crucial for the localeconomy and national economy. From the perspective of behavioral finance, this paperdiscarded the rational manager hypothesis and tried to study whether managerialoverconfidence influence the financial structure of corporations in the real estate listedcompanies of China, and if so, how it influenced the financial structure of corporations.Firstly, based on previous research results, this paper introduced the theories ofrelationship between managerial overconfidence and the financial structure ofcorporations, and then described the basic situation of the real estate industry and itslisted companies, analyzed the financial structure of the real estate listed companies fornearly three years, found that asset-liability ratio was very high in the real estateindustry, and the short-term debt ratio was significantly higher than long-term debt ratio.In the aspect of equity structure, there existed very high concentration of ownership.After that, this paper selected the financial data in the120real estate companies whichlisted in Shanghai and Shenzhen A-share in2012as research samples. Controlling theimportant factors that affected financial structure, the paper chose managerialoverconfidence as the explanatory variable, financial structure as explained variable,empirically analyzed the relationship between managerial overconfidence in thisindustry and the financial structure of corporations.The results showed that managerial overconfidence had significant influence onfinancial structure in Chinese real estate listed companies. The higher degree ofmanagerial overconfidence, the higher financial leverage financial structure will bechosen, and overconfident managers prefer short-term liabilities. Finally, in order tooptimize the financial structure of the real estate market, and to promote thedevelopment of the real estate market more healthy and orderly, the paper proposedseveral suggestions from the perspective of manager’ overconfidence, such asestablished managers’ individual comprehensive quality index system, improvedinternal and external governance mechanisms, constructed a reasonable and effectivemechanism for learning and developed long-term debt market.