Research on integration method and application of enterprise multidimensional standardization management system based on knowledge management

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.