Institutional Investors' Horizons and Managerial Myopia

Abstract

In the context of the Iranian financial market, and with problems such as fragile bubbles in the stock market, the likelihood of stocks crashing, and in particular the severe information asymmetry that exists among investors, most investors are reluctant to take risks and prefer to focus on short-term profitability. This allows many managers to take a myopic approach in investment decisions to increase the firm's short-term profitability. The purpose of this study is to investigate the impact of institutional investors investment horizons including long and short term investment horizons on managerial myopia of the firms listed on the Tehran Stock Exchange (TSE). The research hypotheses wree tested using a sample of 63 companies listed in Tehran Stock Exchange during the year's 2014 to 2018 using Logistic regression model.The results show that according to the first hypothesis test, long-term institutional investors' investment horizons have a significant negative association with the managerial myopia. Also, based on the result of the second hypothesis, we find that short-term investment horizons have a positive and significant association the managerial myopia

Keywords

• institutional investors' horizons
• managerial myopia
• long-term investors' investment horizons
• short -term investors' investment horizons