Study On The Relationship Between Managerial Overconfidence, Financing Structure And Listed Company Performance

The study of managerial overconfidence originates in the1980s, and be introduced to China in recently decade. Through the research on Cognitive psychology and Behavioral Science.Summarize empirical research of scholars, people’s behavior is not entirely rational decision-making, especially for managers. Company managers is the main decision-makers, this cognitive bias of managers is bound to have a significant impact on the company’s decision-making as well as the development of the company. By summarizing the existing literature, we find that:research in this area focus on managerial overconfidence measure, the influence factors of overconfidence, the influence of investment and financing decision-making of the company, mergers and Acquisitions, earnings Management and so on.This research in this field in China is not too long, Therefore, the research in this field is imperfect. Summarizing the existing literature, we find most scholars study the relationship of managerial overconfidence and corporate performance by theoretical models, but, the empirical research in this area is very few. A small number of scholars try to explore the mechanism, from one perspective, such as diversification, board structure, debt policy, corporate investment. but the relationship between the two is not yet clear. The mechanism for the relationship between the two has not been given a reasonable explanation. What relationship do they have? What is the process like? According to this study vacancy, we focus on the mechanism of them, by the perspective of the financing structure. By the logical path from managerial overconfidence to the financing structure, finally, company’s performance.we try to explore the relationship of managerial overconfidence, financing structure and corporate performance.The meaning and value as of this study is:①In the research direction, we expand the research perspective, in a certain degree.②In practical application,we provide theoretical support for the correct understanding of managerial overconfidence and choosing reasonable financing structure to avoid operational risks.By reading literature, we defined the managerial overconfidence concept and combing out the basic theory of the financing structure firstly. Secondly, we summarized existing research, and explore the mechanism in this process based on different perspectives. Finally, this study is based on the financing structure theory and added financing structure variables, explore mechanism of internal influence from the perspective of the financing structure. In this framework model, we make financing structure as the mediating variables. Through corporate financing structure, managerial overconfidence has an impact on the corporate performanceCombing the literature and building the framework model, we propose the following hypotheses:H1:Compared with the managers of non-overconfidence companies, managers overconfidence have higher asset-liability ratio of the company. H2:Compared with the managers of non-overconfidence companies, the managerial overconfidence company lower short-term debt ratio; H3: Asset-liability ratio has a negative influence on company performance.H4: short-term debt ratio of listed company performance.H5:overconfidence has a positive impact on commercial credit rate. H6:commercial credit rate and Bonds payable rate has a positive influence on corporate performance, Rate of bank borrowings has a negative influence on corporate performance.H7:Compared with the managers of non-overconfidence companies, the managerial overconfidence company have worse performance.According to the actual needs of this study, we get the data of the2008-2011listed companies from the CSMAR series of research database for hypothesis testing. And we use SPSS16.0for descriptive statistical analysis of data samples, Multicollinearity test and stepwise regression analysis, to verify the theoretical assumptions of the study.The results of empirical test show that:①the managerial overconfidence level has a positive influence on asset-liability ratio of the company;②the managerial overconfidence level has a significant influence on debt maturity structure;③managerial overconfidence affect the commercial credit rates, the rate of bank borrowings, bonds payable rate.④Company financing structure has a significant influence on company performance.⑤the managerial overconfidence level has a significant and negative influence on company performance.⑥On the basis of the above empirical conclusions,we clarify the mechanism about how Managerial overconfidence can affect corporate performance.According to the research conclusion, this paper proposes the following management recommendations:①make managers recognize this cognitive bias of overconfidence more fully②good managers overconfidence restraint mechanisms;③corporate financial decision-making process optimization;④choose reasonable financing structure to improve corporate performance;⑤By continuous learning, strengthen the knowledge and abilityIn this paper, we make some breakthroughs and innovations:Firstly, we study what is the relationship of managerial overconfidence and listed company performance, from the perspective of the financing structure, providing a unique angle and research directions.This reflects some innovation to a certain extent.Secondly, some scholars have carried out a large number of theoretical and empirical test but they have not study the Study the relationship of managerial overconfidence, financing structure, And listed company Performance in a system.so this paper reflects a certain degree of theoretical innovation.Based on this study, it is also some aspects for continue study:①Managerial overconfidence measure. It is quite important and difficult to find a scientific and reasonable measure for managerial overconfidence, not to mention in China. So this is the further research directions.②this study involves multi-disciplinary knowledge, such as cognitive psychology, behavioral finance, and management science, has a cross-cutting and integrated features. Degree of certainty in the breadth and depth of relevant theoretical knowledge, due to the structural limitations of knowledge, there may be a certain lack of knowledge to manage multi-field theory, so the theoretical derivation, integration is a need to improve.③Managerial overconfidence is a cognitive bias, this cognitive bias in business decisions multifaceted impact, in addition to a variety of factors affect financing decisions, while also impact on corporate investment decisions, earnings management and so on. All aspects of corporate decision-making as well as a variety of corporate decision-making and enterprise performance is a complex interaction system. In this paper, we limited the boundary of the study in financing structure. Expand the boundary of impacts may be a direction of future research.