An Investigation into the Effect of CEO’s Perceptual Biases on Investment Efficiency and Financing Constraints of the Iranian Listed Firms

Advances in Mathematical Finance and Applications

مقاله 6، دوره 6، شماره 1، فروردین 2021، صفحه 79-93   

نوع مقاله: Research Paper

شناسه دیجیتال (DOI): 10.22034/amfa.2019.585038.1182

نویسندگان

Hajar Fallah¹؛ Mohsen Hamidiyan^{* 2}؛ Nurooz Noroolahzadeh²

¹Department of Accounting, Kish International Branch (South Tehran), Islamic Azad University, Kish Island, Iran

²Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran

چکیده

Efficient market hypothesis predicts that capital markets are beset with cer-tain biases which result from wrong estimation, and negatively influence shareholders’ expectations for higher returns, which in turn affects invest-ment efficiency, financial constraints and corporate performance efficacy in competitive markets, and eventually mitigates firm value. The present study aims at examining the impact of CEOs’ perceptual biases on investment efficiency and financing constraints of the firms listed on the Tehran Stock Exchange over the period 2013-2017. Earnings forecast error and CEOs’ overconfidence biases serve as the measure of CEO’s perceptual biases, the model developed by Biddle et al (2009) is employed to proxy for investment efficiency, and KZ model is also adopted to calculate financing constraints. The results reveal that both earnings forecast error and overconfidence biases negatively affect investment efficiency, while they positively influence cor-porate financing constraints.

کلیدواژه‌ها

CEO’s Perceptual Biases؛ Investment Efficiency؛ Financing Constraints

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