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2023-05-16

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

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.

Author - Vahab Rostami, Hamed Kargar, Mahdis Samimifard
Journal - Journal of Risk and Financial Management

Source - https://www.mdpi.com/1911-8074/15/12/581