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Did Manager Behave Overconfidently?


  • RAHARJA, Bayu Sindhu

    (Department of Management, The Faculty of Economics and Business, Universitas Muhammadiyah Magelang, Indonesia)

  • SUHAELI, Dahli

    (Department of Management, The Faculty of Economics and Business, Universitas Muhammdiyah Magelang, Indonesia)

  • MRANANI, Muji

    (Department of Accounting, The Faculty of Economics and Business, Universitas Muhammadiyah Magelang, Indonesia)


This research examines the hypothesis of manager overconfident on financing decision. According to previous research, the manager of higher growth firms tends to have overconfidence to use higher financial leverage on their financing decision, that causes the declining of its performance in the future. The empirical results of this research show that higher growth tends to have higher financial leverage and reduced performance in the future. Nevertheless, higher financial leverage on higher growth is not implied overconfident behavior. Instead, higher financial leverage is a rational decision on financing higher growth firms. This research also gives a different evidence of the firms’ financing behavior in Indonesia. This evidence shows that employing higher financial leverage to proof the hypothesis of manager overconfident is appropriately used on firms which have weak growth.

Suggested Citation

  • RAHARJA, Bayu Sindhu & SUHAELI, Dahli & MRANANI, Muji, 2017. "Did Manager Behave Overconfidently?," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 21(3), pages 32-44.
  • Handle: RePEc:vls:finstu:v:21:y:2017:i:3:p:32-44

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    References listed on IDEAS

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    More about this item


    Sales growth; Debt; Financial leverage; Long-term performance;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance


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