Examination of the Relation between Managerial Overconfidence and Financing Policies in Tehran Stock Exchange
Subject Areas : Financial Knowledge of Securities Analysis
Kazem Chavoshi
1
(استادیار دانشگاه علوم اقتصادی تهران)
Mohammad Rastegar
2
(دکتری مالی)
Mohsen Mirzaee
3
(کارشناس ارشد مدیریت مالی، دانشگاه علوم اقتصادی)
Keywords: financing decision, Overconfidence, Behavioral Finance,
Abstract :
One of the most important decisions faced the firm's managers, is financing decision. Making this kind of decisions has important effects on stockholders’ risk and wealth. However recognizing the factors that affect these decisions has more importance. Many factors influence the financing decisions in the firms that can be classified into two groups: the factors related to firm structure such as agency problems, firm size, insolvency and factors which are related to the management behavioral characteristics such as conservatism, overconfidence. This paper is going to study the effect of one of the psychological factors (overconfidence) on firm's financing decisions. For this purpose we use a panel data of 157 firms from listed companies in Tehran Stock Exchange over the period 2006-2012 The results – based on fixed effect panel data method – show that there is no relation between managerial overconfidence and financing decisions. In addition, it has shown that there are significant relations between growth opportunity, firm size and insolvency risk with financing decisions.