Managerial overconfidence and corporate financial decisions:An empirical study

Abstract

Abstract: The relationship between corporate financial policy and three levels of managerial overconfidence which are chairman of the board, CEO and TMT is comparatively analyzed. The results show that chairman of the board overconfidence has a significant effect on corporate investment, merger, finance, and dividend payout polices. Meanwhile, CEO overconfidence and TMT overconfidence only have significant effect on corporate investment expenditure and debt maturity structure. It is indicated that chairman of the board overconfidence is more appropriate to explain the irrational financial decisions of listed companies in China. In addition, it is found that managerial overconfidence has insignificant effect on corporate capital structure and it is different from some results of foreign literature.

Key words: chairman of the board, CEO, TMT, overconfidence, financial decision

CLC Number:

F830.9

Xiao Fenglei, Li Yanxi, Luan Qingwei. Managerial overconfidence and corporate financial decisions:An empirical study[J]. Science Research Management, 2011, 32(8): 151-160.

References

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