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Board Characteristics and Managerial Overconfidence in an Emerging Market

Author

Listed:
  • Shokrollah Khajavi

    (Department of Accounting, Faculty of Economics, Management and Social Sciences, Shiraz University, Iran)

  • Golamreza Dehghani

    (M. A. of Accounting, Financial and Economic Deputy of Niroo Gostar Professional Group, Iran)

Abstract

This research investigates the relationship between board characteristics and managerial overconfidence of 107 listed companies in Tehran Stock Exchange during 2006-2012. In addition, financial data of the year 2005 have been used to calculate research variables. Furthermore, in order to examine the hypotheses, the research uses pooled/panel regression and ML-binary logit model. Capital expenditure and overinvestment on assets criteria have been used to measure managerial overconfidence, and board size, board independence (BI) and CEO duality have been considered as board characteristics. The findings indicate that only BI has negative and significant effect on managerial overconfidence. Besides, firm age as control variable has a direct and significant effect on capital expenditure

Suggested Citation

  • Shokrollah Khajavi & Golamreza Dehghani, 2016. "Board Characteristics and Managerial Overconfidence in an Emerging Market," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 529-537.
    • Handle: RePEc:eco:journ1:2016-02-24
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    References listed on IDEAS

    as
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    4. Deshmukh, Sanjay & Goel, Anand M. & Howe, Keith M., 2013. "CEO overconfidence and dividend policy," Journal of Financial Intermediation, Elsevier, vol. 22(3), pages 440-463.
    5. J B Heaton, 2002. "Managerial Optimism and Corporate Finance," Financial Management, Financial Management Association, vol. 31(2), Summer.
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    9. Campbell, T. Colin & Gallmeyer, Michael & Johnson, Shane A. & Rutherford, Jessica & Stanley, Brooke W., 2011. "CEO optimism and forced turnover," Journal of Financial Economics, Elsevier, vol. 101(3), pages 695-712, September.
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    Cited by:

    1. Nadiah Amirah Nor Azhari & Suhaily Hasnan & Zuraidah Mohd Sanusi, 2020. "The Relationships Between Managerial Overconfidence, Audit Committee, CEO Duality and Audit Quality and Accounting Misstatements," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(3), pages 18-30, June.
    2. Tolossa Fufa Guluma, 2021. "The impact of corporate governance measures on firm performance: the influences of managerial overconfidence," Future Business Journal, Springer, vol. 7(1), pages 1-18, December.
    3. Zribi, Wissal & Boufateh, Talel, 2020. "Asymmetric CEO confidence and CSR: A nonlinear panel ARDL-PMG approach," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    4. Kofi Mintah Oware & Harshitha Moulya & Thathaiah Mallikarjunappa, 2024. "Corporate social responsibility assurance, board characteristics and social performance disclosure. Evidence of listed firms in India," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1707-1721, April.
    5. Gurdgiev, Constantin & Ni, Qiuxin, 2023. "Board diversity: Moderating effects of CEO overconfidence on firm financing decisions," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).

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    More about this item

    Keywords

    Board Size; Board Independence; CEO Duality; Managerial Overconfidence; Capital Expenditure; Overinvestment on Assets;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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