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Since the 1980th, with the development of modern behavior finance theory, scholars began doubt about the hypothesis of "rational economic man" in traditional corporate governance.Represented by Langevoort(1998), they believed that people are not as rational as the traditional theory assumes, on the contrary, many people are often irrational.Therefore, many scholars gradually introduce psychological factors and people’s irrational behavior to the research of corporate governance. In this process, the influence of manager overconfidence on corporate governance becomes the most compelling part of it (Keiber,2002;Paredes,2004).But nowadays, on the studies of manager overconfidence and corporate governance, most of them are theoretical research, empirical analysis has not yet fully developed, empirical evidence is also limited, the most important reason is that there are disputes on how to measure overconfidence. In addition, most studies of overconfidence are limited to the analysis of Europe and the United States and other countries, for developing countries, especially China, research is still very rare. Therefore, under China’s specific institutional background, do there exist the tendency of manager overconfidence in listed companies?Whether it will affect corporate value? If the influence is obvious, how does it play? These are worthy of our in-depth studies.In terms of the above questions, this paper reviewed a lot of literatures of home and abroad, proposed the research hypothesis and built a research model, made election and measurement of key variables.This paper use empirical research method, collected relevant data from 2004 to 2008 of A-share listed companies in China, get 261 effective sample companies, and use SPSS 12.0 for statistical analysis.Empirical analysis examined manager overconfidence on the impact of corporate value with different corporate life cycle stages, and finally got the following conclusions:(1)Manager overconfidence can significantly affect the value of the corporation. From whole sample tests we found that manager overconfidence and corporate value are positively correlated, with 5% level of significance, indicating that companies with overconfident managers are more valuable than others.(2) Manager overconfidence have different level of infection on different life cycle stage companies:for growing, decline stage companies, manager overconfidence to some extent, will have a positive effect on the value of the corporation, but for mature stage companies, whether manager overconfidence will affect corporate value can still not be sure. Our studies provide new theoretical and practical clues for the management of manager overconfidence, and the enhancement of corporate value.
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