An Study Of The Influence Of Managerial Overconfidence Of The Cash Dividends Policy In Listed Corporations In China

There are three important financial decisions in listed corporations and dividend policy is one of them. The dividend policy which is more rational can determine the rational proportion of the distribution of net profit. Part of them will be used for internal retained and the other part of them will be used as rewards for investors. The reasonable proportion is good for maximizing the value of the company. The development of China's capital market needs to be further improved. Many dividend policies of listed corporations are not reasonable.Traditional dividend policy can not explain these abnormal phenomena reasonably.Behavioral finance theory takes managers' irrational psychological behavior into consideration in the decision-making process and finds a new breakthrough point for the further research of dividend policy. The research shows that overconfidence is the most common and stable psychological deviation of managers' irrational psychological behavior and affects the process of making dividend policy in listed corporations significantly. So it is of significance to study the effect of managerial overconfidence on dividend policy systematically for promoting the healthy and sustainable development of China's stockmarket.In view of this, this paper introduces the research results of behavioral finance theory and refers to the relevant theories of the traditional dividend policy. By sampling data of Shanghai and Shenzhen A-share listed corporations for the period from 2010 to 2014, we discuss the effect of cognitive bias on the cash dividend policy systematically. Based on this,we propose suggestions on how to manage the irrational psychology of overconfidence, and then normalize dividend policy.First, the author establishes the background and purpose of this paper. It also establishes the ideas and methods of this paper through the analysis and summary of domestic and foreign academic achievements. Next, the author summarizes and analysis the relevant theories of dividend policy and managerial overconfidence. It analysis the limitations of the traditional dividend policy theory and introduces behavioral finance theory. It lays a theoretical foundation for the following study in this paper. Then the author analysis and evaluates the current methods of measuring overconfidence. It determines to use the stock option and the frequency of M & A as the specific criteria for the selection of overconfidence samples. At the same time, it puts forward the influence path of overconfidence to the dividend policy and puts forward the hypothesis. Then the author selects the data of listed corporations from 2010 to 2014 as samples and determines the control variables in the study process. We apply Binary Logit Model and Tobit Model to do regression analysis. Finally, the author puts forward corresponding countermeasures and suggestions to manage overconfidence from two angels of internal governance and external environmental governance according to the theoretical analysis and empirical analysis.