The Survey of the Managerial Overconfidence on the Improper Adjustment Costs

In this research, managerial overconfidence is considered as a behavioral explanation for the improper adjustment costs. This study aims to investigate the effect of managerial overconfidence on improper adjustment costs. With using the powerful technique of panel, we  have applied remained overinvestment as index of managerial overconfidence and also other control variables affecting cost stickiness such as the number of the staff, the amount of assets, consecutive decline in sales, natural logarithm 1 in addition to the yield of initial annual share, free cost flow, constant payment to managers. Sampling population of the present study includes 91 accepted companies at Tehran stock exchange and manufacturing parts in the time period of 2007-2016. Based on the findings, the effects of managerial overconfidence on improper adjustment improper adjustment costs is accepted and we can say that too much confidence and trust of the manager leads to increase in cost stickiness. Also, other control variables have meaningful effects on improper adjustment cost.