Research On The Influence Of Letv's Expansion Behavior On Financial Performance

Expansion is an important decision for the development and growth of an enterprise,which determines the direction of the company.However,the company managers who make expansion decisions are not always rational.Scholars at home and abroad have pointed out through research that overconfidence is important for managers to make irrational decisions.the reason.Under the influence of overconfidence psychology,managers' decision-making usually tends to be radical,resulting in distortion of the company's expansion strategy,affecting the company's financial performance,and putting the company into financial distress.This article selects LETV as the research object,from the perspective of managers 'irrationality,to study the impact of LETV managers' overconfidence on the expansion behavior and financial performance of enterprises.First of all,this article measured the overconfidence of Jia Yueting,the founder of LETV com,through the use of manager personal characteristics analysis and mainstream media reports.Next,this article details the vertical integration expansion and diversified foreign investment that LETV adopted in order to achieve the LETV's ecological goal from 2012 to 2017,and analyzed the economic consequences of LETV's rapid expansion,and then from the management The overconfident perspective explains the reasons for the failure of expansion,and gives targeted suggestions according to the situation of LETV.The conclusion of this paper is as follows: through the analysis of Jia Yueting's personal characteristics and the company's profit forecast deviation,it is found that Jia Yueting does have the psychological deviation of overconfidence.And this psychological deviation makes him take a very radical expansion strategy in the management of LETV.The growth rate of the company's total assets has been higher than the average level of the industry,and the outflow of investment cash has also increased in a straight line.The radical expansion strategy makes LETV's financial performance in the short term has been in a leading position,and with the development of time,the capital chain gradually starts to be "unbearable",and the break of the capital chain also makes LETV's financial performance in 2017 turn sharply,falling into a serious financial crisis.This article concludes with a summary of the impact of LETV's expansion on financial performance,and based on its problems,puts forward corresponding improvements,hoping to bring inspiration to the expansion of related companies.The research in this paper not only provides new research ideas for the failure of enterprise expansion,but also provides new company cases,which enriches the practical basis of managers' overconfidence theory.