Measuring Managerial Overconfidence and Demonstrating its Impact on the Lack of Transparency in Financial Reports: An Applied Study
DOI:
https://doi.org/10.31272/jae.i146.1333Keywords:
Overconfidence, lack of transparency, financial reporting, opacity, banksAbstract
The research aims to measure managerial overconfidence and demonstrate its impact on the lack of transparency in financial reports by applying it to a sample of banks listed on the Iraqi stock market. To achieve this goal, the research included a sample of (17) banks drawn from the study population represented by banks listed on the Iraqi stock market. This sample was chosen based on banks that have integrated data for the period extending from the year (2013 to 2022) and adopted quantitative measurement of the data of the study variables through the analysis of financial reports. Managerial overconfidence was measured using three methods which are (the ratio of investment spending to total assets, the investment exaggeration model, and the ratio of debt to equity). The lack of transparency in financial reports was measured according to the moving sum of the absolute value of optional entitlements. Some statistical methods were also used in the statistical program (SPSS) to examine the direction and strength of the relationship and influence between the variables. It was concluded that the research showed that there is no significant relationship between the lack of transparency in financial reports (Y) and managerial overconfidence according to the second measure, exaggeration of investment (M2), while the variable the lack of transparency in financial reports recorded a positive significant correlation with both managerial overconfidences according to the first measure, the percentage of investment spending. (M1), and the third measure is the debt ratio (M3). The research recommends to responsible authorities the need to establish strict legal legislation to limit administrative opportunism resulting from internal trading in information and to form an independent body responsible for supervising and controlling the disclosures of companies listed on the Iraqi Stock Exchange.
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