Quarterly Publication

Document Type : Original Article

Authors

1 Assistant professor, Management and Accounting Department, Islamic Azad University, South Branch, Tehran, Iran

2 Assistant Professor, Department of Accounting,Faculty of Management, University of Qom, Qom

10.22050/pbr.2018.93426

Abstract

Overconfident managers, who tend to overestimate their capabilities, underestimate the possibility and impact of side effects in projects. The purpose of this study is to review the effect of managerial overconfidence on research and development expenditures and the moderating effect of firm value and liquidity on this relationship. For this purpose 51 companies were chosen from oil/gas, and petrochemical Companies listed on the Tehran Stock Exchange over the period 2012-2017. This research, within three basic hypotheses, is analyzed by Eviews software and shows that managerial overconfidence has positive effect on research and development. Company liquidity has direct effect on relationship between managerial overconfidence and R&D, but firm value has no meaningful effect on the relationship between managerial overconfidence and R&D.
Keywords: managerial overconfidence, R&D, liquidity, firm value

Keywords

Main Subjects

Ahmed, A.S. & Duellman, S. (2013). Managerial overconfidence and accounting conservatism. Journal of Accounting Research, 51(1), 1- 30.

Badi, H., Baltagi. (2014). Econometric Analysis of Panel Data, Jon Wiley & Sons, New York.

Fairchild, R.J. (2005). The Effect of Managerial Overconfidence, Asymmetric Information, and Moral Hazard on Capital Structure Decisions. Journal of Behavioral Finance2(4).

Fallah Shams Layalestani, M., Ghalibaf Asl, H., and Nobakht Saraei, S. (2010). Investigation on the effect of experience on risk taking, overconfidence and herding behavior. Quarterly Journal of Securities Exchange, (12)3, 25-42.

Galasso, A. & Simcoe, T.S. (2011). CEO Overconfidence and Innovation. Management Science, 57, 1469-1484.

Gervais, S., Heaton, J.B. and Odean, T. (2011). Overconfidence, Compensation Contracts, and Capital Budgeting. The Journal of Finance, 66, 1735-1777.

Hafezniya. (2008). An Introduction to Methodology in Humanities, SAMT Publication.

Hirshleifer, D., Low, A. & Teoh, S.H. (2012). Are Overconfident CEOs Better Innovators?. The Journal of Finance, 67, 1457-1498.

Jabbari, H., and Moe’meni, H. (2017). Investigating the relation between investment in R&D and the sensitivity of liquidity flow under managerial optimism in the companies listed on Tehran Stock Exchange, International Management Conference, Iran Accounting, Babol, Kousha Gostar International Conference Center. https://www.civilica.com/Paper-MAACI01-MAACI01_050.html.

Khanagha Barzegari, J., Akhavan Bahabadi, F.,  Ghaedi, S., Zare, A. H., & Zare Hosseinabadi, H. (2017). The Impact of R&D Expenditure on the Performance of Companies Listed in Tehran Stock Exchange. Journal of Accounting Reviews, (14), 1-18.

Kim, S., Yoo, J. (2017). Does R&D Expenditure with Heavy Related Party Transactions Harm Firm Value?. Sustainability, 9(7), 1-15.

Pascal, N., Sophie, N., & Mikiharu, N. (2010). The valuation of R&D expenditures in Japan. Accounting and Finance, 50(4), 899-920.

Rust, F.C. (2015). Requirements for a systems-based research and development management process in transport infrastructure engineering. South African Journal of Industrial Engineering, 26(1), 87-101.

Wang, D., Sutherlandb, D., Ning, L., Wang, Y., & Pan, X. (2018). Exploring the influence of political connections and managerial overconfidence on R&D intensity in China's large-scale private sector firms, Technovation, 69, 40-53.

Zavertiaeva, M. A., López‐Iturriaga, F. J., & Kuminova, E. V. (2018). Better innovators or more innovators? Managerial overconfidence and corporate R&D. Manage Decis Econ, 4(39), 447-461.