Abstract: On the basis of the current related research results,under the hypotheses condition that senior managers of listed companies are overconfident,this paper sets up an appropriate mathematical model to study the effect mechanism of the senior manager's over confident psychological preference on the dividend payout policy and the external financing decision of firm theoretically. The results show that,when the senior manager of listed company is optimistic about the future business environment,the cash dividend and debt financing amount of listed company would increase in his/her overconfidence;and when senior manager of listed company is pessimistic about the future business environment,the cash dividend and debt financing amount of listed company would decrease in his/her overconfidence. The cash dividend and debt financing amount of listed company would decrease in the company's stock price and the interest rate of debt financing fund;and the equity financing amount of listed company would increase in the company's stock price and the interest rate of debt financing fund.This paper reasonably expands and deepens the related research results obtained by Deshmukh,Goe and Howe theoretically.

Key words: overconfidence, senior manager of listed company, dividend payout policy, debt financing decision, equity financing decision