Managerial overconfidence, government intervention and leverage decision : evidence from Malaysia /
Ting, Irene Wei Kiong
Managerial overconfidence, government intervention and leverage decision : evidence from Malaysia / Irene Ting Wei Kiong - Kuantan, Pahang : UMP, 2015 - xxiii, 151 p. : ill. ; 30 cm. + 1 CD-ROM
Faculty of Industrial Management
Thesis (Doctor of Philosophy)-- Universiti Malaysia Pahang – 2015
Bibliography : p. 128-146
This thesis investigates the impact of managerial overconfidence and firm leverage decision. The role of government ownership as moderating effects to the relation is also measured. Eleven measures of managerial overconfidence behavior that is classified based on Motivation, Ability, Roles and Situation Factors (MARS) model are employed to examine its impact to leverage decision. Dynamic panel models on managerial overconfidence are developed to examine the relationship between managerial overconfidence, government intervention and leverage decision of publicly listed companies in Malaysia for the period of 2004-2013. The four general objectives of this research are: 1) To examine is there any significant differences in means between GLCs and NGLCs for explanatory variables. 2) To evaluate a behavioral perspective in studying the relationship between managerial overconfidence and firm leverage decisions. 3) To measure the role of government ownership as a moderating effect to the relation between managerial overconfidence and firm leverage decision. 4) To estimate the dynamic relationship by the presence of a lagged dependent variable (LEVEt-1) to leverage decision. The thesis concludes that: 1) When CEOs are motivated, their overconfidence is significantly and positively related to leverage decision. 2) CEOs’ ability is significantly and positively related to leverage decision. 3) CEOs’ role is significantly negative related to leverage decision. 4) Government ownership moderates the relationship between managerial overconfidence and firm leverage decision. 5) Malaysian public listed firms adjust debt towards an optimal level and the speed of adjustment is approximately 21% to 26% per annum. This thesis contributes to the growing body of knowledge in behavioral financial theory specifically on the antecedents of firm leverage decision in several dimensions, namely theoretical, methodological and managerial perspective. Theoretically, this thesis expands knowledge on what influences firm leverage decision from human point of view. The findings highlight the importance of selecting CEO in organizations in order to reduce the occurrence of having high leverage position. Therefore, it is beneficial for the firms to revisit their relevant policies and procedures specifically related to CEOs selection in order to avoid financial distress condition to the firms. Organizations may assess CEO’s background (profile photo, network, previous performance, remuneration, education, experience, tenure, age, duality, gender and founder) as the findings provide evidences these characteristics play a crucial role in deciding firm leverage decision. Moreover, conceptually, this thesis provides direct evidence suggesting that government is an important party that would control managerial overconfidence. In terms of methodology, this study contributes to firm leverage decisions by estimating the mean reversion towards target which is absent specifically in Malaysia context. This study may shed light on the risk management policies of Malaysian public listed companies.
THE0007947(Local)
Faculty of Industrial Management--Dissertations
Universities and Colleges--Dissertations
Theses
Managerial overconfidence, government intervention and leverage decision : evidence from Malaysia / Irene Ting Wei Kiong - Kuantan, Pahang : UMP, 2015 - xxiii, 151 p. : ill. ; 30 cm. + 1 CD-ROM
Faculty of Industrial Management
Thesis (Doctor of Philosophy)-- Universiti Malaysia Pahang – 2015
Bibliography : p. 128-146
This thesis investigates the impact of managerial overconfidence and firm leverage decision. The role of government ownership as moderating effects to the relation is also measured. Eleven measures of managerial overconfidence behavior that is classified based on Motivation, Ability, Roles and Situation Factors (MARS) model are employed to examine its impact to leverage decision. Dynamic panel models on managerial overconfidence are developed to examine the relationship between managerial overconfidence, government intervention and leverage decision of publicly listed companies in Malaysia for the period of 2004-2013. The four general objectives of this research are: 1) To examine is there any significant differences in means between GLCs and NGLCs for explanatory variables. 2) To evaluate a behavioral perspective in studying the relationship between managerial overconfidence and firm leverage decisions. 3) To measure the role of government ownership as a moderating effect to the relation between managerial overconfidence and firm leverage decision. 4) To estimate the dynamic relationship by the presence of a lagged dependent variable (LEVEt-1) to leverage decision. The thesis concludes that: 1) When CEOs are motivated, their overconfidence is significantly and positively related to leverage decision. 2) CEOs’ ability is significantly and positively related to leverage decision. 3) CEOs’ role is significantly negative related to leverage decision. 4) Government ownership moderates the relationship between managerial overconfidence and firm leverage decision. 5) Malaysian public listed firms adjust debt towards an optimal level and the speed of adjustment is approximately 21% to 26% per annum. This thesis contributes to the growing body of knowledge in behavioral financial theory specifically on the antecedents of firm leverage decision in several dimensions, namely theoretical, methodological and managerial perspective. Theoretically, this thesis expands knowledge on what influences firm leverage decision from human point of view. The findings highlight the importance of selecting CEO in organizations in order to reduce the occurrence of having high leverage position. Therefore, it is beneficial for the firms to revisit their relevant policies and procedures specifically related to CEOs selection in order to avoid financial distress condition to the firms. Organizations may assess CEO’s background (profile photo, network, previous performance, remuneration, education, experience, tenure, age, duality, gender and founder) as the findings provide evidences these characteristics play a crucial role in deciding firm leverage decision. Moreover, conceptually, this thesis provides direct evidence suggesting that government is an important party that would control managerial overconfidence. In terms of methodology, this study contributes to firm leverage decisions by estimating the mean reversion towards target which is absent specifically in Malaysia context. This study may shed light on the risk management policies of Malaysian public listed companies.
THE0007947(Local)
Faculty of Industrial Management--Dissertations
Universities and Colleges--Dissertations
Theses