Managerial Overconfidence and Investment Decision: Empirical Validation in the Tunisian Context
Halim Smii,
Mondher Kouki,
Hayet i Soltan
Issue:
Volume 7, Issue 4, August 2021
Pages:
82-94
Received:
17 July 2021
Accepted:
6 August 2021
Published:
4 September 2021
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.
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 overconfid...
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Capital Adequacy Regulation and Financial Distress Resolution in the Nigerian Banking Industry: An ARDL Approach
Adolphus Joseph Toby,
Jibaniya Katon Danjuma
Issue:
Volume 7, Issue 4, August 2021
Pages:
95-100
Received:
21 June 2021
Accepted:
24 August 2021
Published:
10 September 2021
Abstract: This paper investigates the impact of capital adequacy regulation on financial distress resolution in the Nigerian banking industry within the ARDL framework using aggregate time series data. Financial distress resolution is measured by ratio of distressed banks, while capital adequacy regulation is measured by credit to risk weighted assets ratio, capital to total assets ratio and assets to capital ratio. The sample comprises annual time series data covering the period from 1986 to 2018, while the data are obtained from three reliable sources: namely, Central Bank of Nigeria (CBN) statistical bulletin, Nigeria Deposit Insurance Corporation (NDIC) quarterly and Nigeria Stock Exchange (NSE) fact sheet. The plausible ARDL specification is determined using the Schwarz information criterion, which selects a model with two lagged values of ratio of distressed banks as additional explanatory variables. We find that financial distress resolution exhibits persistence behavior and depends on its two lagged values, but with a positive and sizable net own effect. However, the relationship between financial distressed resolution and capital adequacy regulation measures has no lagged effect. Also, both the individual and joint impacts of the three capital adequacy regulation ratios are not statistically significant. Based on these findings, we conclude that capital adequacy regulation is not an important determinant of financial distress resolution in Nigeria, and that the regime of risk-based capital regulation may produce further moral hazards behavior in the Nigerian banking sector.
Abstract: This paper investigates the impact of capital adequacy regulation on financial distress resolution in the Nigerian banking industry within the ARDL framework using aggregate time series data. Financial distress resolution is measured by ratio of distressed banks, while capital adequacy regulation is measured by credit to risk weighted assets ratio,...
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