Market Competition,Overconfidence Of Managers And Constraints On Corporate Financing

As far as China's economic development is concerned,corporate financing constraints have become one of the major bottlenecks restricting economic transformation and upgrading.The enterprise has certain capital,ability survival develops.How to raise funds successfully is a problem that enterprises must face.Therefore,it is particularly important to study the factors behind corporate financing constraints.Behavioral finance has emerged,developed and improved gradually in recent decades,and the most representative result is the overconfidence theory.Different from the psychological overconfidence,the overconfidence in behavioral finance shows that it accounts for high future returns,underestimates project risks and losses,and thus makes irrational economic decisions in business activities.Compared with ordinary employees,managers are more likely to have such overconfidence psychology.Based on this,this paper tries to start from the perspective of manager psychology and study the impact of overconfidence on financing constraints.In addition,as an important external governance mechanism,the level of market competition also plays a role in regulating overconfidence managers and corporate financing constraints.In this paper,market competition degree is selected as the external environment variable to investigate whether it has a regulating effect on the relationship between overconfidence of managers and financing constraints of enterprises.This paper selects a-share listed companies in Shanghai and Shenzhen from 2008 to 2016 as research samples to study the relationship among market competition,manager overconfidence and financing constraints.Further discuss the effect of overconfidence on enterprise financing under different market competition environment.The results show that there is a significant positive correlation between manager overconfidence and corporate financing constraints,and this relationship is more obvious in a low market competition environment.The main innovation of this paper is to explore the influence of manager's overconfidence on enterprise financing constraints from the perspective of behavioral finance theory,and further enrich and expand the theory of traditional finance.By combining the market competition of external environment variables with the characteristics of managers,this paper verifies whether market competition,as an external governance mechanism,can affect the psychology of overconfidence of managers and thus alleviate the negative effect of overconfidence on financing constraints.In addition,in the past,scholars studied overconfidence of managers and corporate financing mostly from the perspective of the selection of financing behaviors.This paper integrated the previous research results of scholars and studied the influence of overconfidence managers on corporate financing from the new perspective of corporate financing constraints.The empirical test results show that:Firstly,the manager's overconfidence is positively correlated with the financing constraint,that is,the more overconfident the manager is,the more serious the financing constraint is.Secondly,in the environment of low market competition,overconfidence of managers has a more serious negative impact on financing constraints.