The effect of managers' overconfidence on the possibility of financial crises

Subject Areas : Journal of Capital Market Analysis

Ali Nemati ¹ ( Faculty member )

Received: 2021-11-27 Accepted : 2022-01-12 Published : 2021-11-22

Keywords: Logistic regression, Profitability Ratio, Managerial overconfidence, Financial distress likelihoood,

Abstract :

abstract :The effect of managers' overconfidence on the possibility of financial crisesIn this study, the relationship between the Managerial overconfidence and Financial distress like lihoood is examined. The research sample consists of 185 firms listed in Tehran Stock Exchange during 1389 to 1393 and in the period studied by systematic elimination method was studied. To review hypothesis of research, logistic regression model was used. The results of this study show that in the period studied, Managerial overconfidence and Financial distress likelihoood and there is a significant positive relationship. In other words, the Managerial overconfidence in firms is increasing the financial distress likelihood. In other words, Managerial overconfidence, increasing the Financial distress likelihoood in the firms. The effect of Managerial overconfidence, on the Financial distress likelihoood is significant at 95 percent confidence level. The results show that the life of the company depends on the ability of company managers and the satisfaction of a wide range of related groups of the companyKeywords: Managerial overconfidence, Financial distress likelihoood, Profitability Ratio, logistic regression