Study On Managers’ Overconfidence,Decision Of Equity Re-financing And Performance Ofchinese Listed Companies

Financing is a basic financial activities of the company,while equity re-financing is one of the crucial links.Reasonable decision-making of equity refinancing not only help the company develop,but also can make the allocation of market resources more reasonable.Different from traditional finance theory and western financial market situation,listed companies in China put up a preference of equity re-financing.Behavioral finance is based on the assumption of bounded rationality,and study the abnormal phenomena existing in the financial market from a new perspective which is different from traditional finance.This paper combines with the theory of behavioral finance,and does research into the effect on the decision of equity re-financing and the performance of listed companies of overconfidence.This paper summarizes the research results at home and abroad first,including overconfidence,the influence on financing decision of overconfidence and methods of equity re-financing,which lay the foundation of the study.After that,this paper analyzes the present status of equity re-financing in Chinese financial market,based on which,puts forward the research hypotheses.The research hypotheses include that when the managers of listed companies show overconfidence,the companies will prefer to equity re-financing,and that when the managers of listed companies show overconfidence,the companies’decision of choosing additional issue or rights issue will be affected,but the influence direction is uncertain.Based on the research hypotheses,this paper chooses A-share companies as samples,and the time interval is between 2010 and 2013.Choosing overconfidence as the representative of bounded rationality,this paper set up two indexes of overconfidence,that one has constraint and the other one has no constraint.This paper builds Probit model to test research hypotheses.Beyond that,this paper also chooses the listed companies which have proceeded additional issue or rights issue in 2010 and 2011 as samples,and analyzes the effect on the performance of companies of different ways by comparing between additional issue and rights issue.This article bonds overconfidence,the decision of equity re-financing and the performance of companies together,studies the influencing mechanism between non-rationality of managers and the operation of companies,and proposes some relative strategic suggestions.The experimental results show that,when the managers of listed companies show overconfidence,the companies will prefer to equity re-financing,and the managers’overconfidence don’t exert an influence on the companies’ decision of choosing additional issue or rights issue.The results also show that,in the year when companies proceed additional issue or rights issue,the companies’ performance tend to improve,but in the years after proceeding additional issue or rights issue,the companies’ performance tend to decline,and the companies which choose rights issue tend to decline even more.