The Impact Of Negative Media Coverage On Executive Overconfidence

Traditional financial theory holds that people's decisions are based on the assumption of rational expectations as the basic premise, but real economic activity, not every market participant can fully in accordance with traditional financial theory model to act, people irrational behavior plays a role can not be ignored in the economic system. Abnormal economic things could not be reasonably explained by traditional rational economic man hypothesis, based on this, behavioral finance theory in the 1970s appear, it will conduct research into the psychology of corporate governance, and achieved fruitful research results and gradually make up the basis of a rational economic man classic finance defects. Behavioral finance theory suggests that overconfident executives are important factors affecting corporate governance, corporate governance and have had a significant negative impact. Current research focuses on mechanism of executive overconfidence on corporate organ the same as that negative economic consequences, but have not been able to find effective ways to settle these issue of executive overconfidence. In this regard, the paper will turn to media governance perspective, explore the negative media coverage and the connection between confidence and excessive executive. Media management company as an important external governance mechanisms, corporate governance oversight role. Therefore, this paper attempts to study whether the negative media coverage on executive overconfidence impact and the impact mechanism, and give some useful advice.This paper follows the general "questions-theoretical derivation-empirical test" the idea of the study, at first, sort out negative media coverage and Top overconfident relevant literature, analysis of results and drawbacks of previous research, research questions. Then, analyze the logic and negative media coverage between executive overconfidence, construction of the theoretical framework, and make relevant research hypotheses. Finally, according to the contents of this subject, to build the relational model, select 2014 in China A-share listed firms as a sample study, combined with data collected using descriptive statistics analysis, binary logistic analysis and empirical test.Results of this study show that:first,the negative media coverage and executive overconfidence significant negative correlation,the media can be reduced by reducing agency costs,reputation mechanism and cause administrative concerns three roles mechanism,inhibition off executive irrational confidence tie with behavior,and then make the firm management performance.Second,compared to the state-owned listed companies,not good media coverage and private enterprises executives overconfidence is a obviously negative nexus.Presents a more obviously negative nexus between the third,compared to listed companies located in China's central and western regions,the negative media coverage and the eastern part of executives of government enterprises was irrational confidence.