Journal of Accounting and Management Vision

Journal of Accounting and Management Vision

Investigating the effect of managers' overconfidence on the diversity of companies in companies listed on the stock exchange

Document Type : Original Article

Authors
saeed pakdelan 1
hosein hesami 2
raheleh asef nia 3
Faezeh Bagheri Dadokolai 4
1 Assistant Professor of Accounting, Shandiz Non-Profit Higher Education Institute, Mashhad.
2 PhD Student in Public Administration, Sari Branch, Islamic Azad University, Sari, Iran.
3 Master of Financial Management, Shandiz Non-Profit Higher Education Institute, Mashhad, Iran.
4 Master of Financial Management, Shandiz Non-Profit Higher Education Institute, Mashhad
Abstract
Corporate diversification is a form of corporate strategy that many managers use to improve company performance. According to agency theory, managers have more information than shareholders and may make decisions that are not in the best interests of shareholders, and managers tend to overestimate their abilities when evaluating their relative skills. Managers often manage profits in order to mislead shareholders into the actual economic performance of the company. One of the important factors that affect profit management can be the company's diversification strategy. The purpose of this study is to investigate the relationship between managers' overconfidence and corporate diversification. For this purpose, 119 companies listed on the Tehran Stock Exchange for the years 92 to 98 were selected. Multiple regression analysis was used to test the hypotheses. The results show that there is a negative relationship between managers' overconfidence and company diversification.
Keywords
Company diversification
managers' overconfidence
company value