Investigating the moderating effect of investors' behavioral patterns on the relationship between manager's myopia and social responsibility

Abstract

The purpose of this study is to investigate the effect of managerial myopia on corporate social responsibility (CSR) and also the moderating effect of investors' behavioral biases (emotional behavior, investor myopia and herding behavior) on the relationship between managerial myopia and corporate social responsibility. By reducing research and development and marketing activities, short-sighted managers sacrifice long-term profitability for short-term gains. Since social obligations usually have long-term benefits; Managerial myopia may affect corporate social performance. Furthermore, since management decisions are influenced by investor behavior, investors' behavioral biases are expected to influence the relationship between managerial myopia and corporate social responsibility. The research hypotheses were tested for a sample of 143 companies admitted to the Tehran Stock Exchange during the years 1391 to 1400 using a multivariate regression model, considering the fixed effects of year and industry. The results show that managerial short-sightedness has a negative effect on the corporate social responsibility score, and the behavioral patterns of investors, including emotional behavior, market short-sightedness, and herding behavior strengthen this negative relationship.

Keywords

• corporate social responsibility
• managerial myopia
• emotional behavior
• investor myopia
• herding behavior