Empirical Research on Managerial Risk-Averse and Financing Behavior

Based on the study of irrational managers in behavioral corporate finance, this paper proposes a financing decision-making model by the construction of investors´ rationality and analysis to managers´ risk-aversion. Measuring managerial risk aversion under behavioral corporate finance paradigm according to risk aversion index, this paper analyzes the financing behavior of risk-averse managers by means of analyzing DJ-China 88 index from 2000 to 2004 through Logistic regression and mean analysis. The findings show that if other variables are well-controlled, then the risk-averse index has an obvious negative influence on debt financing decision. The higher is the level of risk-aversion, the less is the likelihood of application of debt financing, which means risk-averse managers prefer stock financing.