Management Overconfidence and Capital Structure

摘要：

Based on behavioral corporate finance, this paper abandons the rational management hypothesis of the traditional theory of capital structure, and documents both theoretically and empirically how management overconfidence determinates the capital structure of the firms. The theoretical model shows that overconfident management overestimates themselves management skills and the profitability of the firms, and underestimates the risk of the project, which result in overconfident managers taking radical decision of debt financing. In the empirical analysis, we employ enterpriser confident index (ECI), collected by the State Statistical Bureau, to measure the degree of management overconfidence. Controlling for the traditional determinants which may affect capital structure, we find that ECI is positively related to the total debt ratio and short-term debt ratio, which document that management overconfidence play an important role on capital structure. Hence, this paper expands and enriches the theory of capital structure.

关键词： Behavioral finance Capital structure Management overconfidence

作者: Yu Minggui Xia Xinping Pan Hongbo

作者单位: School of Management, Huazhong University of Science and Technology, P.R.China, 430074

会议类型: 国际会议

会议名称: 第六届管理学国际会议(Proceedings of ICM2007 the 6th International on Management)

会议地点: 武汉

会议语种:英文

页码: 817-823

在线出版日期: 2007-08-03（万方平台首次上网日期，不代表论文的发表时间）