Managerial overconfidence, internal financing and investment
Corporate investment decisions are determined by a variety of factors, including various managerial measures, including overconfidence of managers, which are important determinants of corporate investment decisions. Most corporate executives prefer internal financing, but if internal resources are n...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Iran Finance Association
2020-12-01
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| Series: | Iranian Journal of Finance |
| Subjects: | |
| Online Access: | https://www.ijfifsa.ir/article_121887_8e7b55aff0001fa21401d4ba5f7d109d.pdf |
| _version_ | 1811322427441938432 |
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| author | Shahnaz Mashayekh Fatemeh Morshedi |
| author_facet | Shahnaz Mashayekh Fatemeh Morshedi |
| author_sort | Shahnaz Mashayekh |
| collection | DOAJ |
| description | Corporate investment decisions are determined by a variety of factors, including various managerial measures, including overconfidence of managers, which are important determinants of corporate investment decisions. Most corporate executives prefer internal financing, but if internal resources are not sufficient to meet this need, they use external resources with the least degree of information asymmetry. The purpose of this study was to investigate the effect of managerial overconfidence on investment and the moderating effect of the internal financing method is on their relationship. The study consisted of listed companies in Tehran Stock Exchange during the period 2011 to 2016 and using a systematic elimination sampling method, 97 companies were selected. To investigate the research hypotheses, EVIEWS software and panel data regression method was used. The results of the research showed that managers’ overconfidence has a positive and significant effect on investment as well as underinvestment, but internal financing does not have a significant effect on the relationship between the overconfidence of managers and investment as well over-investment. But the effect of internal financing on the relationship between managers’ overconfidence and underinvestment was a significant positive. Finally, it became clear that internal financing had a significant negative impact on investment and over-investment. |
| first_indexed | 2024-04-13T13:34:50Z |
| format | Article |
| id | doaj.art-9fbba7ec16684d8c824c25fcfe5f1ef7 |
| institution | Directory Open Access Journal |
| issn | 2676-6337 2676-6345 |
| language | English |
| last_indexed | 2024-04-13T13:34:50Z |
| publishDate | 2020-12-01 |
| publisher | Iran Finance Association |
| record_format | Article |
| series | Iranian Journal of Finance |
| spelling | doaj.art-9fbba7ec16684d8c824c25fcfe5f1ef72022-12-22T02:44:48ZengIran Finance AssociationIranian Journal of Finance2676-63372676-63452020-12-014410212510.30699/ijf.2020.121887121887Managerial overconfidence, internal financing and investmentShahnaz Mashayekh0Fatemeh Morshedi1Associate Prof., Faculty of Accounting, Alzahra University, Tehran, Iran.Ph.D. Candidate, Faculty of Accounting, Alzahra University, Tehran, Iran.Corporate investment decisions are determined by a variety of factors, including various managerial measures, including overconfidence of managers, which are important determinants of corporate investment decisions. Most corporate executives prefer internal financing, but if internal resources are not sufficient to meet this need, they use external resources with the least degree of information asymmetry. The purpose of this study was to investigate the effect of managerial overconfidence on investment and the moderating effect of the internal financing method is on their relationship. The study consisted of listed companies in Tehran Stock Exchange during the period 2011 to 2016 and using a systematic elimination sampling method, 97 companies were selected. To investigate the research hypotheses, EVIEWS software and panel data regression method was used. The results of the research showed that managers’ overconfidence has a positive and significant effect on investment as well as underinvestment, but internal financing does not have a significant effect on the relationship between the overconfidence of managers and investment as well over-investment. But the effect of internal financing on the relationship between managers’ overconfidence and underinvestment was a significant positive. Finally, it became clear that internal financing had a significant negative impact on investment and over-investment.https://www.ijfifsa.ir/article_121887_8e7b55aff0001fa21401d4ba5f7d109d.pdfinvestmentinternal financingoverconfidence managersover-investmentunderinvestment |
| spellingShingle | Shahnaz Mashayekh Fatemeh Morshedi Managerial overconfidence, internal financing and investment Iranian Journal of Finance investment internal financing overconfidence managers over-investment underinvestment |
| title | Managerial overconfidence, internal financing and investment |
| title_full | Managerial overconfidence, internal financing and investment |
| title_fullStr | Managerial overconfidence, internal financing and investment |
| title_full_unstemmed | Managerial overconfidence, internal financing and investment |
| title_short | Managerial overconfidence, internal financing and investment |
| title_sort | managerial overconfidence internal financing and investment |
| topic | investment internal financing overconfidence managers over-investment underinvestment |
| url | https://www.ijfifsa.ir/article_121887_8e7b55aff0001fa21401d4ba5f7d109d.pdf |
| work_keys_str_mv | AT shahnazmashayekh managerialoverconfidenceinternalfinancingandinvestment AT fatemehmorshedi managerialoverconfidenceinternalfinancingandinvestment |