Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context

Halim Smii; Mondher Kouki; Hayet i Soltan

doi:doi:10.11648/j.ijfbr.20210704.11

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Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context

Halim Smii, Mondher Kouki, Hayet i Soltan

Published in International Journal of Finance and Banking Research (Volume 7, Issue 4)

Received: 17 July 2021 Accepted: 6 August 2021 Published: 4 September 2021

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Abstract

Nowadays and especially after the revolution and the troubles that Tunisia has witnessed, the investment phenomenon has been affected and remains inefficient. Indeed this inefficiency is due to an excessive investment behavior. However, this issue has been discussed under the influence of behavioral finance. We explore that the manager’s overconfidence can explain his behavior when it comes to business investment. The objective of this investigation is to examine the effect of managers' personal characteristics, namely overconfidence, on the investment decision of 45 Tunisian listed companies from 2009 to 2018. We construct a proxy made up of both the remuneration of the directors and his decision-making power to measure the excess of managerial confidence and we use the Richardson model to measure the volume of investment. Our empirical results give the following conclusion: A positive and significant relationship between the manager’s overconfidence and the investment volume of listed Tunisian companies.

Published in	International Journal of Finance and Banking Research (Volume 7, Issue 4)
DOI	10.11648/j.ijfbr.20210704.11
Page(s)	82-94
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Manager Skill, Overconfidence, Free Cash-Flow, Investment Cost, Decision-making

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Halim Smii, Mondher Kouki, Hayet i Soltan. (2021). Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context. International Journal of Finance and Banking Research, 7(4), 82-94. https://doi.org/10.11648/j.ijfbr.20210704.11

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ACS Style

Halim Smii; Mondher Kouki; Hayet i Soltan. Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context. Int. J. Finance Bank. Res. 2021, 7(4), 82-94. doi: 10.11648/j.ijfbr.20210704.11

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AMA Style

Halim Smii, Mondher Kouki, Hayet i Soltan. Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context. Int J Finance Bank Res. 2021;7(4):82-94. doi: 10.11648/j.ijfbr.20210704.11

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@article{10.11648/j.ijfbr.20210704.11,
  author = {Halim Smii and Mondher Kouki and Hayet i Soltan},
  title = {Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {4},
  pages = {82-94},
  doi = {10.11648/j.ijfbr.20210704.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210704.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210704.11},
  abstract = {Nowadays and especially after the revolution and the troubles that Tunisia has witnessed, the investment phenomenon has been affected and remains inefficient. Indeed this inefficiency is due to an excessive investment behavior. However, this issue has been discussed under the influence of behavioral finance. We explore that the manager’s overconfidence can explain his behavior when it comes to business investment. The objective of this investigation is to examine the effect of managers' personal characteristics, namely overconfidence, on the investment decision of 45 Tunisian listed companies from 2009 to 2018. We construct a proxy made up of both the remuneration of the directors and his decision-making power to measure the excess of managerial confidence and we use the Richardson model to measure the volume of investment. Our empirical results give the following conclusion: A positive and significant relationship between the manager’s overconfidence and the investment volume of listed Tunisian companies.},
 year = {2021}
}

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TY  - JOUR
T1  - Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context
AU  - Halim Smii
AU  - Mondher Kouki
AU  - Hayet i Soltan
Y1  - 2021/09/04
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210704.11
DO  - 10.11648/j.ijfbr.20210704.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 82
EP  - 94
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210704.11
AB  - Nowadays and especially after the revolution and the troubles that Tunisia has witnessed, the investment phenomenon has been affected and remains inefficient. Indeed this inefficiency is due to an excessive investment behavior. However, this issue has been discussed under the influence of behavioral finance. We explore that the manager’s overconfidence can explain his behavior when it comes to business investment. The objective of this investigation is to examine the effect of managers' personal characteristics, namely overconfidence, on the investment decision of 45 Tunisian listed companies from 2009 to 2018. We construct a proxy made up of both the remuneration of the directors and his decision-making power to measure the excess of managerial confidence and we use the Richardson model to measure the volume of investment. Our empirical results give the following conclusion: A positive and significant relationship between the manager’s overconfidence and the investment volume of listed Tunisian companies.
VL  - 7
IS  - 4
ER  -

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Author Information

Halim Smii

Faculty of Economics and Management, University of Tunis El Manar, Tunisia
Mondher Kouki

Faculty of Management and Economics Sciences of Tunis, Tunis-El Manar, Tunisia
Hayet i Soltan

Faculty of Economics and Management of Sfax, Department of Economic and Management Laboratory (LEG), University of Sfax, Sfax, Tunisia

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APA Style

Halim Smii, Mondher Kouki, Hayet i Soltan. (2021). Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context. International Journal of Finance and Banking Research, 7(4), 82-94. https://doi.org/10.11648/j.ijfbr.20210704.11

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ACS Style

Halim Smii; Mondher Kouki; Hayet i Soltan. Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context. Int. J. Finance Bank. Res. 2021, 7(4), 82-94. doi: 10.11648/j.ijfbr.20210704.11

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AMA Style

Halim Smii, Mondher Kouki, Hayet i Soltan. Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context. Int J Finance Bank Res. 2021;7(4):82-94. doi: 10.11648/j.ijfbr.20210704.11

Copy | Download

@article{10.11648/j.ijfbr.20210704.11,
  author = {Halim Smii and Mondher Kouki and Hayet i Soltan},
  title = {Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {4},
  pages = {82-94},
  doi = {10.11648/j.ijfbr.20210704.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210704.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210704.11},
  abstract = {Nowadays and especially after the revolution and the troubles that Tunisia has witnessed, the investment phenomenon has been affected and remains inefficient. Indeed this inefficiency is due to an excessive investment behavior. However, this issue has been discussed under the influence of behavioral finance. We explore that the manager’s overconfidence can explain his behavior when it comes to business investment. The objective of this investigation is to examine the effect of managers' personal characteristics, namely overconfidence, on the investment decision of 45 Tunisian listed companies from 2009 to 2018. We construct a proxy made up of both the remuneration of the directors and his decision-making power to measure the excess of managerial confidence and we use the Richardson model to measure the volume of investment. Our empirical results give the following conclusion: A positive and significant relationship between the manager’s overconfidence and the investment volume of listed Tunisian companies.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context
AU  - Halim Smii
AU  - Mondher Kouki
AU  - Hayet i Soltan
Y1  - 2021/09/04
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210704.11
DO  - 10.11648/j.ijfbr.20210704.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 82
EP  - 94
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210704.11
AB  - Nowadays and especially after the revolution and the troubles that Tunisia has witnessed, the investment phenomenon has been affected and remains inefficient. Indeed this inefficiency is due to an excessive investment behavior. However, this issue has been discussed under the influence of behavioral finance. We explore that the manager’s overconfidence can explain his behavior when it comes to business investment. The objective of this investigation is to examine the effect of managers' personal characteristics, namely overconfidence, on the investment decision of 45 Tunisian listed companies from 2009 to 2018. We construct a proxy made up of both the remuneration of the directors and his decision-making power to measure the excess of managerial confidence and we use the Richardson model to measure the volume of investment. Our empirical results give the following conclusion: A positive and significant relationship between the manager’s overconfidence and the investment volume of listed Tunisian companies.
VL  - 7
IS  - 4
ER  -

Copy | Download