Test inflation uncertainty and overinvestment with emphasis on managerial overconfidence

Subject Areas : Journal of Investment Knowledge

Mehdi Alinezhad Saroukolayi ¹ , Zabihollah Taheri ² , Keyvan Akbarpour ³

1 - Assistant Professor in Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran (corresponding author).
2 - PHD student in Department of Accounting, Science and Research Branch, Islamic Azad University, Tehran, Iran.
3 - Department of Accounting, Neka Branch, Islamic Azad University, Neka, Iran.

Received: 2017-06-19 Accepted : 2017-10-17 Published : 2018-12-22

Keywords: overinvestment, fluctuation in inflation, managers overconfidence,

Abstract :

Investment is one of the most important and effective factors on growth and development of economy. Shareholders and stakeholders expect managers to recognize the best investment opportunities to achieve the ideal efficiency. In this research, investment by the listed firms in Tehran Stock Exchange is studied considering fluctuations in inflation and the effect of managers overconfidence as two factors. The research population consists 193 companies from 2011 – 2015. To test overinvestment, In this research employed Bidel et al (2009) model. The results show that fluctuation in inflation has no effect on overinvestment. Also, it shows that managers overconfidence has direct and meaningful impact on overinvestment. Moreover, managers overconfidence is an effective factor on inflation and overinvestment.    

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