Subject Areas :

Farzad Mohammadi ^{1 *} , بیتا دهقان خانقاهی ² , Mahdi Abdsharafat ³

1 - 1. M.A in Financial Engineering and Risk Management, Afagh Higher Education Institute, Urmia, Iran
2 -
3 -

Received: 2025-06-20 Accepted : 2025-08-18 Published : 2025-09-20

Keywords:

Abstract :

The aim of the present study was to investigate the effect of bankruptcy risk on capital expenditures with an emphasis on the effect of managers' overconfidence in companies listed on the Tehran Stock Exchange. Accordingly, this study sought to achieve this goal by analyzing data related to 80 sample companies over an 11-year period from 1392 to 1402. To analyze the relevant data, multivariate regression and mixed data and EViews10 and STATA17 software were used. Data analysis showed that bankruptcy risk has a positive and significant effect on capital expenditures, that is, a higher weight of debt in the company's capital structure will impose more bankruptcy costs on the company, while increasing the weighted average of capital from the optimal level. Also, managers' overconfidence has a positive and significant effect on the relationship between bankruptcy risk and capital expenditures. This means that overconfident managers believe that they can control the quantity and quality of the results of their investment projects, while underestimating the probability of their failure in these projects, and insist on the idea that by continuing projects with negative net worth, they can maximize the value of the company in the long run.