A Empirical Study On Risk-Averse Managers And The Financing Preference Of Listed Company

The theories about choosing optimal financing mostly have one research premises, which based on the Rationality person. Then, two mainstream capital structure theories are formed:balance theory and pecking order theory. But they can not be entirely appropriate to explain the fact the our country’s listed companies strongly prefer to equity financing. So, many national scholars carry out research about this prefer form different angels, including financing costs, corporate governance and institutional policies. However, They don’t form consistent patterns. Along with the traditional finance research hypothesis to relax, People questioned rational person, and finally formed behavioral finance theory. People use the psychology knowledge to explore the market main body of irrational behavior, and the impact of decisions successfully explain some visions. Some foreign scholars began to research the company financing decision choice based on irrational person, forming investors irrational and managers irrational two study angles. The former has been researched by more scholars, forming a certain theories, such as "market timing" theory. It’s influence on financing decisions, from the perspective of managers irrational, are focused on the managers "overconfidence" this irrational behavior. But research based on managers overconfidence fail to explain the status of China’s listed companies equity financing preference. Psychology researches find that individuals still exist other irrational psychology,such as risk aversion, frame dependence and mental accounts, etc. One of the important discoveries of Prospect theory as the core theories behavioral finance is that people usually show asymmetry when they are facing returns and losses. when facing the choice which include possibility of loss and with receipts, people will take risk-averse behavior and display conservatively, showing the characteristics of risk aversion. Through the experimental study, the domestic scholars such as Fengjian Li find managers in China have expressed risk aversion irrational behavior according with the Prospect theory when they make decisions. So this paper tries to research manager risk-averse how to the influence financing decisions in corporate finance structure, to explain the listed companies’ equity financing preference behavior which universally exists.In the first part, I analyze the relationship between the risk-aversion managers and financing decisions, based on the value of prospect theory model, drawing risk-adverse managers and enterprise leverage between levels is inversely related conclusions. The higher the degree of risk aversion, the smaller the possibility of using debt, the more prefer to use equity financing. In the second part, though generalizing the domestic and overseas scholars about risk-averse managers measurement indexes, combined with the specific circumstances of the listed companies in China, I consider managers age, managers tenure, proportion of shareholding as the alternative variables degree of risk-averse managers of listed companies. In the third part, using multivariate linear regression to measure risk-averse managers financing preference for empirical research, which finds that managers age, managers tenure and proportion of shareholding have a remarkable correlation relationship to asset ratio. The higher the degree of risk aversion, the lower the asset ratio listed company.