Investigation of Managerial Myopia on Future Financial Performance in Companies Listed on Tehran Stock Exchange

Document Type : Research Paper

Authors

1 Professor. Of Financial Management, Faculty of Management and Accounting,Tehran University , Tehran , Iran

2 PhD student of Industrial management-financial trends, Faculty of Management and Accounting, Tehran University, , International Campus-kish Island(, Tehran, Iran

Abstract

Myopia has been described as a form of bias or an orientation that restricts serious consideration of alternatives to decision-makers. Common definition of myopia is a lack of foresight or discernment; a narrow view of something and short-sightedness in thinking or planning. The 117 companies are selected by systematic elimination method from the companies listed in TSE during the years of 2006 to 2014. In this study, reaction of the capital market is measured based on two criteria abnormal returns is modified based on market returns and size of the company. Also we consider firms with myopic management when having positive future financial performance and increased return on assets, reduce marketing cost and R&D expenses. The research results show the positive and significant effect of managerial myopia on the future financial performance in companies listed in TSE. In other words, if the managerial myopia exists, the future financial performance will be improved.

Keywords

Main Subjects

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History

  • Receive Date: 17 February 2017
  • Revise Date: 28 September 2017
  • Accept Date: 18 June 2017

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