Author(s)

Zhenkai Lyu

Corresponding Author

Zhenkai Lyu

ABSTRACT

Traditional financial theory implies the hypothesis that the subject of economic behavior is rational-economic man. It is a rewarding exploration and complement for developing the corporation financial theory to bring managers’ irrational factors into the research field of corporate finance. Overconfidence is an important psychological characteristic that affects managers’ behavior. On the basis of summarizing the concept and behavior of overconfidence, this paper mainly analyses the causes and influencing factors of enterprise managers’ overconfidence. Meanwhile, this paper also discusses the influence of managers’ overconfidence on corporate investment, merger and financing behavior, thus providing some reference value for corporate governance practice.

KEYWORDS

Managerial overconfidence, investment behaviour, corporate finance