The Effect of the Weakness of Domestic Controls on the Inefficiency of Investment

Due to the limited resources, in addition to the level of investment, it should be considered investment efficiency in decision making. The inefficiency of investment undermines the company's good performance and ultimately leads to a reduction in value creation for the shareholders of the company. The purpose of this study was to investigate the effect of the weakness of domestic controls on the inefficiency of investment in accepted companies in Tehran Stock Exchange. In this regard, data about 106 Tehran Stock Exchange members were used for the period from 2011 to 2015. To test the hypotheses, multivariate regression technique was used by using panel data. The results of the research hypothesis test indicate that weakness of internal controls has a negative and significant effect on the investment level of companies. Other findings suggest that the weakness of internal controls has a positive and significant effect on over-investment and lower investment (inefficiency). Therefore, managers need to implement measures to increase the quality of internal control of the company in order not to face the lack of financial resources and the use of investment opportunities.