The impact of managerial attributes on cash holding and investment efficiency and the mediator role of cash holding

Abstract

Purpose The present study aims to explore the impact of managerial attributes on cash holding and investment efficiency and the mediating role of cash holding for companies listed on the Tehran Stock Exchange. Design/methodology/approach Information about 178 companies in 2014–2021 was examined. In the present study, managerial overconfidence, managerial myopia and managerial ability were considered as the managerial attributes. Findings The present findings showed that managerial attributes (i.e. overconfidence, myopia and ability) have a significant effect on investment efficiency. In addition, cash holding has a significant positive effect on investment efficiency. Furthermore, cash holding plays a mediating role in the relationship between managerial attributes and investment efficiency. Originality/value There is a gap in the impact of managerial attributes on cash holding and investment efficiency and investigating the mediating role of cash holding. This gap creates an opportunity for studying these variables in depth. The present study contributes to the identification of factors influencing investment efficiency to advance future studies and support practical efforts. This study contributes to a better understanding of the effect of managerial attributes on investment decisions in the context of diverging opinions about manager-specific effects on company’s outcomes.