The Influence of Fair Value Measurement on Radical Financing of Irrational Managers Based on Fixed Effects Model and Fisher Permutation Test | Zendy

Wei Wang | Zendy; Xiaohui Qu | Zendy; Jian-Ju Du | Zendy; Jiaming Zhu | Zendy

Open Access

The Influence of Fair Value Measurement on Radical Financing of Irrational Managers Based on Fixed Effects Model and Fisher Permutation Test

Author(s) -

Wei Wang,

Xiaohui Qu,

Jian-Ju Du,

Jiaming Zhu

Publication year - 2021

Publication title -

complexity

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.447

H-Index - 61

eISSN - 1099-0526

pISSN - 1076-2787

DOI - 10.1155/2021/5513204

Subject(s) - overconfidence effect , value (mathematics) , irrational number , corporate governance , fair value , test (biology) , sample (material) , earnings , accounting , business , economics , enterprise value , actuarial science , finance , psychology , social psychology , computer science , paleontology , chemistry , geometry , mathematics , chromatography , machine learning , biology

Adopting fair value measurement may bring more earnings fluctuations and induce irrational psychology and radical financing behavior of managers. Based on behavioral corporate governance theory, using the sample of Chinese A-share nonfinancial listed companies during 2007–2017, this paper empirically examines the regulatory effect of fair value measurement, that is, whether fair value measurement affects the company's financing decisions when managers have irrational psychological characteristics, i.e., overconfidence. The study found that overconfident managers of the company that have fair value measurement assets will be more aggressive for debt decisions, indicating that fair value measurement has a positively regulatory effect on overconfident managers.

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