Corporate Managerial Overconfidence and Debt Default Risk—— A Case Study of Evergrande Group

Abstract

In recent years, China's real estate industry has faced severe debt risks under the "housing is for living, not for speculation" policy. This policy orientation, emphasizing the fundamental attribute of housing as a residence rather than an investment vehicle, has gradually tightened financing channels for real estate enterprises. The debt crisis of Evergrande Group, the world's most indebted real estate enterprise, has attracted widespread attention. Based on behavioral finance, this paper takes Evergrande as a case to explore the impact mechanism of managerial overconfidence on debt default risk. It is found that the management of Evergrande showed significant irrational characteristics in strategic decision-making: ignoring policy regulations, maintaining high-leverage operations through debt financing, and suffering governance failures due to centralized family control. The study reveals that managerial overconfidence has a stronger explanatory power for debt risks than traditional financial indicators, providing a new perspective for debt default research and practical implications for corporate governance reform, industry risk prevention, and policy optimization.