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The Effect of Managerial Myopia on the Adjustment Speed of the Company’s Financial Leverage towards the Optimal Leverage

Author

Listed:
  • Vahab Rostami

    (Department of Economics and Administrative Sciences, Payame Noor University, Tehran 19395-4697, Iran)

  • Hamed Kargar

    (Department of Economics and Administrative Sciences, Payame Noor University, Tehran 19395-4697, Iran)

  • Mahdis Samimifard

    (Department of Accounting, Zanjan University, Zanjan 45371-38791, Iran)

Abstract

The adjustment speed of financial leverage indicates the movement of companies towards the optimal capital structure, and clearly shows the financing policies of companies. The importance of optimal leverage is such that the growth and survival of companies depend on this factor. This study investigates the effect of managers’ myopia on the adjustment speed of financial leverage toward optimal leverage. The current research is applied, and from the methodological point of view, the correlation is a causal type (retrospective). The statistical population of the research includes all the companies admitted to the Tehran Stock Exchange between 2011 and 2020, and using the systematic elimination sampling method, 124 companies were selected as the research sample. The research results showed that the myopia of managers has an opposite effect on the adjustment speed of financial leverage, so in companies with myopic managers, the adjustment speed of financial leverage decreases towards optimal leverage.

Suggested Citation

  • Vahab Rostami & Hamed Kargar & Mahdis Samimifard, 2022. "The Effect of Managerial Myopia on the Adjustment Speed of the Company’s Financial Leverage towards the Optimal Leverage," JRFM, MDPI, vol. 15(12), pages 1-12, December.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:12:p:581-:d:995030
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    References listed on IDEAS

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    1. Grzegorz Zimon & Arash Arianpoor & Mahdi Salehi, 2022. "Sustainability Reporting and Corporate Reputation: The Moderating Effect of CEO Opportunistic Behavior," Sustainability, MDPI, vol. 14(3), pages 1-28, January.
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    Cited by:

    1. Jialin Song & Luyu Wang & Sihong Wu & Yiyi Su, 2024. "Stock Overvaluation, Management Myopia, and Long-Term Firm Performance," JRFM, MDPI, vol. 17(4), pages 1-18, April.

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