Investigating the impact of operational risk on profitability, ownership and managerial short-sightedness in large and small companies

Document Type : Original Article

Authors

1 Master's Student in Accounting, Islamic Azad University, Bardskan Branch, Iran

2 Member of the Academic Staff of Islamic Azad University, Bardskan Branch, Iran

Abstract

In the present study, the relationship between operational risk, profitability and ownership with managerial short-sightedness in large and small companies has been investigated. The study population of the present study are the companies listed on the Tehran Stock Exchange in a seven-year period from 2012 to 2019. Finally, due to the limitations of the research and using the systematic elimination method, data about 130 companies has been collected. The research in terms of purpose is empirical. In terms of the type of research design, relying on historical data, it is post-event and the method of inference is inductive and correlational. In this study, linear regression has been used to test the research hypotheses. Eviews software was used to analyse the data and test the research hypotheses. According to the results of research hypotheses, operational risk affects the profitability and the amount of investment of investors in companies. On the other hand, management short-sightedness affects investment changes; Operational risk also affects management short-sightedness.

Keywords

Main Subjects


Bushee, B.J. (2008). The Influence of Institutional Investors on Myopic R&D Investment Behavior. Accounting Review, 73(3), 305-333.
Chowdhury, J. (2016). Managerial Myopia: A New Look. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1991429.
Dess, G.G. & Picken, J.C. (2014). Creating competitive (dis) advantage: Learning from Food Lion's freefall. Academy of Management Executive, 13(3): 97-111.
Ducharme, L., Malatesta P.H. & Sefcik, S.E. (2014). Earnings Management, tock Issues, and Shareholder Lawsuits. Journal of Financial Economics, 71(1), 27-49.
Duruigbo, E. (2017). Tackling shareholder short-termism and managerial myopia. Available at: http://works.bepress.com/emeka_duruigbo/3.
Eriksen, K.W. & Kvaloy, O. (2015). Myopic risk-taking in tournaments, Available at: http://www.sv.uio.no/esop/english/research/news-and-events/events/2011/pdf.
Graham, J.R., Harvey, C.R. & Rajgopal, S. (2009). The Economic Implications of Corporate Financial Reporting. Journal of Accounting and Economics, 40 (1–3), 3-73.
Healy, P.M. & Wahlen, J.M. (2016). A Review of the Earnings Management Literature and Its Implications for Standard Setting. Accounting Horizons, 13(4), 365-383.
Kern, D.A. (2016). A matter of strategic mis-fit: Management myopia and value destruction. Doctoral dissertation, Oklahoma State University.
Lamey, L., Deleersnyder, B., Dekimpe, M.G. & Steenkamp, J.B. (2017). How business cycles contribute to private-label success: evidence from the United States and Europe. Journal of Marketing, 71(1), 1-15.
Laverty, K.J. (2011). Economic Short-Termism. The Debate, the Unresolved ssues, and the Implications for Management Practice and Research. Academy of Management Review, 21(3), 825-860.
Levinthal, D.A. & March, J.G. (2007). The Myopia of Learning. Strategic Management Journal, 14(S2), 95-112.
Mizik, N. & Jacobson, R. (2014). Myopic Marketing Management: Evidence of the Phenomenon and Its Long-Term Performance Consequences in the SEO Context, Marketing Science, 26(3), 361–79.
Mizik, N. (2013). The Theory and Practice of Myopic Management. Journal of Marketing Research, 47(4), 594-611.
Srivastava, R.K., Shervani, T.A. & Fahey, L. (2014). Market-Based Assets and Shareholder Value: A Framework for Analysis. Journal of Marketing, 62(1), 2-18.
Volume 2, Issue 3
September 2019
Pages 38-52
  • Receive Date: 12 July 2019
  • Revise Date: 29 July 2019
  • Accept Date: 13 August 2019