Investigating the Effect of Capital Markets on Management Characteristics; with an Emphasis on Role of Stock Returns

Document Type : Research Paper


1 PhD., Department of Financial Management, Kish International Campus, University of Tehran, Kish, Iran.

2 Prof., Department of Financial Management, Faculty of Management and Accounting, University of Tehran, Tehran, Iran.

3 Assistant Prof., Department of Financial Management, Faculty of Industrial Engineering and Management, Shahrood University of Technology, Shahrood, Iran.


Objective: The main goal of this research is investigating the effect of capital markets on management characteristics (management myopia, management Optimism, managementconservatism, Management Forecast Accuracy, managementstructure and management ability) with an emphasis on the role of stock returns (abnormal stock returns and specific stock returns).
Methods: For this purpose, the data of 165 firms listed in the Tehran Stock Exchange, between 2007 to 2017 were extracted; the method to test the hypothesis was a multiple regression model and using a combined data model.
Results: Findings of the research indicate that managerial myopia characteristic have a negative and significant effect on abnormal and specific returns and management Optimismhave positive but insignificant on abnormal and specific returns.By increasing the managementconservatism on the level of stock abnormal return companies has been significantly increased and the level of stock specific return has been significantly reduced. Management forecast accuracy Characteristic will also have a positive and significant effect on abnormal and specific returns. Furthermore, the independence of the board has a Positiveand significant effect on abnormal and specific returns and the gender diversityof board have positive but insignificant on abnormal return & negative and insignificant on specific returns. The variable of management stability also show that a negative and insignificant impact on abnormal return & a positive and insignificant effect on specific returns. Finally, the management ability Characteristic will have a positive but insignificant on abnormal returns & positive and significant effect on specific returns.
Conclusion: Based on the results obtained; an increase in management myopia leads to a decrease in the abnormal returns and specific returns of the listed companies. An increase in management optimism results in an increase in abnormal stock returns and specific stock returns, although this result is not statistically significant. Also, as the conservatism of managers earned increases the abnormal stock returns and lower specific stock returns also increases. In addition, abnormal returns and specific stock returns with increased Management Forecast Accuracy have increased and companies with higher Forecast Accuracy have earned higher returns.Other findings show that the independence of the board members has led to a significant increase in unusual returns and specific stock returns, while the board's gender diversity respectively with an increase and decrease in the meaning of u abnormal returns and specific stock returns has been accompanied.Management stability has led to lower abnormal stock returns and increased specific stock returns. Moreover by increasing the ability of managers, the abnormal returns and specific returns of the listed companies have been added.


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