Statistics
| Number of Journals | 26 |
| Number of Issues | 447 |
| Number of Articles | 4,563 |
| Article View | 5,389,768 |
| PDF Download | 3,592,574 |
Investigating the Relationship between Overconfidence Management and Investment Performance with Emphasis on the Mediating Role of Internal Financing | ||
| مجله دانش حسابداری | ||
| Volume 11, Issue 4 - Serial Number 43, December 2020, Pages 171-186 PDF (312.94 K) | ||
| Document Type: Research Paper | ||
| DOI: 10.22103/jak.2020.14894.3114 | ||
| Authors | ||
| Gholamreza Soleymani Amiri1; Vahid Eftekhari2; Fatemeh Daneshyar* 3 | ||
| 1Associate Professor of Accounting, Alzahra University, Tehran, Iran. | ||
| 2Ph.D. Candidate of Accounting, Allameh University, Tehran, Iran. | ||
| 3Ph.D. Candidate of Accounting, Alzahra University, Tehran, Iran. | ||
| Abstract | ||
| Objective: Overconfidence is an interdisciplinary concept related to the possibility of misjudgment in psychology. More importantly, management overconfidence is a concept derived from behavioral financing. Overconfidence can define unfounded belief in one's cognitive abilities, judgments, and intuitive reasoning. Overconfidence is one of the most important personality traits of managers that affect risk-taking companies in prioritizing their financial resources in terms of cost. Companies prefer to use the domestic budget and then the external financial resources as a last resort to issuing new shares. Because managers with overconfidence feel optimistic about the profitability of their business, they assume the capital market is underestimating their stock. In cases where the entity needs financing, they prefer financing through issuing bonds instead of issuing shares and think they may increase the wealth of shareholders by choosing debt with a short-time maturity. Overconfidence is irrational behavior, and corporate executives express it when making business decisions. The purpose of this study is to investigate the relationship between overconfidence management and investment efficiency with emphasis on the mediating role of internal financing In the companies listed on the Tehran Stock Exchange, TSE, over the period 2009-2018. Methods: Data collection completed using modern software, financial statements of the TSE official website. To test the research hypotheses, we used a panel data model with Eviews software. In this research, the statistical sample consists of information and data of 101 companies from the TSE. This study tests five hypotheses. The logarithm of total assets was used to measure the control variable of company size, and the ratio of long-term debt to total assets to measure the financial leverage control variable. Also, the ratio of net profit to total assets was used to assess the control variable of return on assets, and the ratio of net profit to equity to assess profitability. Results: Overconfidence in management has a positive and significant relationship with internal financing. Internal financing has a positive and significant relationship with overinvestment and a negative and significant relationship with underinvestment. Internal financing does not have any mediating effect on the relationship between management overconfidence and investment efficiency. Control variables are firm size, financial leverage, return on assets, and profitability. The difference between earnings per share and real earnings per share measures the management distrust. The logarithm of the accumulated profit and legal reserves measure the variable of domestic financing, and investment efficiency is divided into two variables of over-investment and under-investment. Conclusion: As managers become more confident, their willingness to use internal resources increases, and as internal financing rises, managers tend to invest more. Manager's distrust is an essential factor in financing so that managers with overconfidence incline to raise domestic financing and investment more than others. | ||
| Keywords | ||
| Overconfidence of Management; Investment Efficiency; Internal Financing | ||
| References | ||
|
ثقفی، علی؛ معتمدی فاضل، مجید. (1390). رابطه میان کیفیت حسابرسی و کارایی سرمایه‌گذاری در شرکت‌های با امکانات سرمایه‌گذاری بالا. پژوهش‌های حسابداری مالی، (4)3، 14-1. چاوشی، کاظم؛ رستگار، محمد؛ میرزائی، محسن. (1394). بررسی رابطه اطمینان بیش‌ازحد مدیران و انتخاب سیاست‌های تأمین مالی در شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران. دانش مالی تحلیل اوراق بهادار، (25)8، 41-29. حسنی القار، مسعود؛ رحیمیان، نظام‌الدین. (1397). بررسی تأثیر بیش اطمینانی مدیریت در ساختار سررسید بدهی در شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران. مدیریت دارایی و تأمین مالی، (1)6، 106-89. خرمی، داریوش؛ غلامی جمکرانی، رضا. (1395). سازوکارهای نظام راهبری شرکتی و خوش‌بینی مدیریتی. دانش حسابداری، 7(27)، 182-159. عرب صالحی، مهدی؛ امیری، هادی؛ کاظمی نوری، سپیده. (1393). بررسی تأثیر اعتماد به نفس بیش از حد مدیران ارشد بر حساسیت سرمایه‌گذاری- جریان‌های نقدی. پژوهش‌های حسابداری مالی، (2)6، 128-115. مهربان‌پور، محمدرضا؛ محمدی، منصور؛ رجب بیکی، محمد علی. (1396). بررسی رابطه بین بیش اطمینانی مدیران و کنترل‌های داخلی حاکم بر گزارشگری مالی. دانش حسابداری، 8(4)، 139-119. References
Arabsalehi, M., Amiri, H., Kazemi Noori, A. (2014). The effect of top executives' overconfidence on the investment-cash flow sensitivity. Journal of Financial Accounting Research, 6(2), 115-128 [In Persian].
Baker, M., Ruback, R., Wurgler, J. (2007). Behavioral corporate finance. Handbook of corporate finance: Empirical Corporate Finance, 1, 89-145.
Barros, L.A.B., Silveira, A.D.M. (2007). Overconfidence, managerial optimism and the determinants of capital structure. www.ssrn.com.
Bates, T.W. (2005). Asset sales, investment opportunities, and the use of proceeds. Journal of Finance, 60(1), 105-135.
Ben-David, I., Graham, J.R., Harvey, C.R. (2007). Managerial overconfidence and corporate policies. Nber Working Papers doi: 10.3386/w13711.
Chavoshi, K., Rastegar, M., Mirzaee, M. (2015). Examination of the relation between managerial overconfidence and financing policies in Tehran Stock Exchange. Financial Knowledge of Securities Analysis, 8(25), 29-41 [In Persian].
Cooper, A.C. Woo, C., Dunkelberg, W. (1988). Entrepreneurs perceived chances for success. Journal of Business Venturing, 3, 97–108.
Deshmukh, S., Goel, A., Howe, K.M. (2013). CEO overconfidence and dividend policy. Journal of Financial Intermediation, 22(3), 440–463.
Fazzari, S.M., Hubbard, R.G., Petersen, B.C. (1988). Financing constraints and corporate investment. Brookings Papers on Economic Activity, 1, 141-195.
Goel, A.M., Thakor, A.V. (2008). Overconfidence, CEO selection, and corporate governance. Journal of Finance, 63(6), 2737–2784.
Gomariz, M.F.C., Ballesta, J.P.S. (2014). Financial reporting quality, debt maturity and investment efficiency. Journal of Banking & Finance, 40(C), 494-506.
Graham, J.R., Harvey, C.R. (2001). The theory and practice of corporate finance: Evidence from the field. Nankai Business Review, 60(2–3), 187-243.
Hackbarth, D. (2008). Managerial traits and capital structure decisions. Journal of Financial and Quantitative Analysis, 43(04), 843-881.
Hasani Alghar, M., Rahimian, N. (2018). The effect of managerial overconfidence on debt maturity structure in listed companies in Tehran Stock Exchange. Asset Management and Financing, 6(1), 89-106 [In Persian].
He, D., Teruya, J., Shimizu, T. (2010). Sticky selling, general and administrative cost behavior and its changes in Japan. www. ssrn. com.
He, Y., Chen, C., Hu, Y. (2019). Managerial overconfidence, internal financing, and investment efficiency: Evidence from China. Research in International Business and Finance, 47(C), 501-510.
Heaton, J.B. (2002). Managerial optimism and corporate finance. Financial Management, 31(2), 33-45.
Huang, R., Tan, K., Faff, R.W. (2016). CEO overconfidence and corporate debt maturity. Journal of Corporate Finance, 36, 93-110.
Huang, W., Jiang F., Liu, Z., Zhang, M. (2011). Agency cost, top executives' overconfidence, and investment-cash flow sensitivity- Evidence from listed companies in China. Pacific- Basin Finance Journal, 19(3), 261-277.
Ishikawa,M., Takahashi, H. (2010). Overconfident managers and external financing choice. Review of Behavioral Finance, 2, 37–58.
Kabiri, R. (2019). The effect of managers' overconfidence and internal financing on investment efficiency. New Research Approaches In Management and Accounting, 15(3),86-95 [In Persian].
Khorrami, D., Gholami Jamkarani, R. (2016). Corporate governance mechanisms and managerial optimism. Journal of Accounting Knowledge, 7(27), 159-182 [In Persian].
Korner, P. (2007). The determinants of corporate debt maturity structure: evidence from czech firms (In English). Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, 57(3-4), 142-158.
Li, W.L., Xie, G.L., Hao, J.Y. (2014). The empirical study on the influence of managerial overconfidence on overinvest behavior. Journal of Shanxi Finance and Economics University, (10), 76-86.
Li, Z.L., Zhao, H.P., Song, Y.F. (2009). Empirical research on managerial overconfidence and corporate financing behavior of pecking-order, IEEE 16th International Conference on Industrial Engineering and Engineering Management, 1496-1500.
Malmendier, U., Tate, G., Yan, J. (2011). Overconfidence and early-life experiences: the effect of managerial traits on corporate financial policies. Journal of Finance, 66(5), 1687-1733.
March, J.G., Shapira, Z. (1987). Managerial perspectives on risk and risk taking. Management Science, 33(11), 1404-1418.
Marimuthu, M. (2009). Corporate restructuring, firm characteristics and implications on capital structure. Journal of Business and Management, 4(1), 123-131.
Mehrabanpour, M.R., Mohamadi, M., Rajabbeyki, M.A. (2017). Relationship between managerial overconfidence and internal controls over financial reporting. Journal of Accounting Knowledge, 8(4), 119-139 [In Persian].
Myers, S.C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575–592.
Myers, S.C., Majluf, N.S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
Paramasivan, C., subramanian.T. (2008). Financial management new age. International publisher.
Renneboog, L., Simons, T., Wright, M. (2007). Why do public firms go private in the UK? The impact of private equity investors, incentive realignment and undervaluation. Journal of Corporate Finance, 13(4), 591-628.
Richardson, S. (2006). Over-investment of free cash flow. Review of Accounting Study, 11,159-189.
Roll, R. (1986). The hubris hypothesis of corporate takeovers. Journal of Business, 59(2), 197-216.
Shefrin, H. (2001). Behavioral corporate finance. Journal of Applied Corporate Finance, 14(3), 113-124.
Yu, M.G., Xia, X.P., and Zou, Z.S, (2006). The relationship between managers' overconfidence and enterprises' radical behavior in incurring debts. Management World, 8, 104-112. | ||
|
Statistics Article View: 1,134 PDF Download: 750 |
||