Myopic Management Theory and R&amp;amp;D Investment Decisions

Rajput, Suresh Kumar Oad; Marwat, Jahanzeb; Wongchoti, Udomsak

doi:10.2139/ssrn.3491115

Cited by 2 publications

(4 citation statements)

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“…The previous section has verified that managers would be more likely to practise myopic management on R&D investment decisions when listing. Theoretical models and studies show that managerial myopia can take many shapes and forms depending on the specific conditions the firm is operating in (Fedyk and Khimich, 2018; Oad Rajput et al ., 2019). Hence, this section separates the R&D myopic management into R&D over‐investment and under‐investment to fully examine hypothesis H3.…”

Section: Analysis and Resultsmentioning

confidence: 99%

“…Given the high information asymmetry and the incentives to go public, managers would choose to make short‐term investment decisions in R&D to reach a favourable valuation, cater to investors' inclination and avoid long‐term costs (Xie et al ., 2020). Thus, considering the different specific conditions the IPO firm is operating in, managers could adopt many forms of myopic management in R&D, e.g., R&D over‐investment and under‐investment (Ahuja and Novelli, 2017; Fedyk and Khimich, 2018; Oad Rajput et al ., 2019; Dong et al ., 2020). However, investors who are not aware of these potential R&D management operations would be more likely to overvalue the security during IPOs.…”

Section: Related Literature and Hypotheses Developmentmentioning

confidence: 99%

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The long‐run role of innovation in the IPO market: inhibition or promotion?

Zhou

Sadeghi

2021

Accounting & Finance

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This study investigates the long‐term role of innovation in the Chinese IPO market. Innovation outcome (patent) has a promoting effect on the long‐term market, while innovation input (R&D) shows a variable inhibitory control, which turns into a favourable impact four years after the IPO due to lag and cumulative effects. Moreover, this inhibitory effect increases and has no positive turnback in firms with R&D myopic management. Furthermore, government subsidies strengthen the effect of innovation during different periods while weakening the positive effect of innovation input four years after the IPO due to firms' rent‐seeking behaviour aiming to obtain government funds.

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Section: Analysis and Resultsmentioning

confidence: 99%

Section: Related Literature and Hypotheses Developmentmentioning

confidence: 99%

The long‐run role of innovation in the IPO market: inhibition or promotion?

Zhou

Sadeghi

2021

Accounting & Finance

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“…Oad Rajput, Marwat, and Wongchoti (2019) compare the prevention of myopic and non-myopic companies in terms of financial strength. Myopic companies differ from nonmyopic companies in the level of leverage, cash ownership, sales growth, earned-to-capital ratio, dividend, age, and company size.…”

Section: Temporal Myopiamentioning

confidence: 99%

“…Furthermore, unexpected cuts in R&D and marketing may indicate a positive shift in financial flexibility. The positive change in financial flexibility attracts stock premiums and provides an incentive for overpricing, resulting in falling prices in the following years (Oad Rajput et al 2019). Conversely, the increase in the return on the stock of non-sighted companies is most likely due to higher financial flexibility, as nonsighted companies have low leverage and high cash holdings.…”

Section: Temporal Myopiamentioning

confidence: 99%

Managerial Myopia Control to Improve Financial Performance in Microfinance Institutions

Anam¹,

Khajar²,

Mutamimah³

2023

R. Econ. and Finan.

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Management makes many strategic decisions that have an impact on the performance of the company. Decision-making carried out by management allows for decision-making bias. Our research seeks to gain a further understanding of the managerial phenomenon of myopia, where previous empirical research has been very limited and conceptual. This study aims to analyze the influence of managerial myopia on financial performance in microfinance institutions. This decision-making bias is a concern because of the impact it causes and is often not realized by many managers. Methodology This research uses explanatory research that emphasizes the relationship between research variables through hypothesis testing. Research variables include temporal myopia, spatial myopia, failure myopia, and financial performance. Data collection was carried out using structured questionnaires, and analysis was performed using PLS-SEM with SMART-PLS software. The results showed that managerial myopia (temporal, spatial, and failure) negatively affects financial performance. These results indicate that the biased practices of management may affect the company's financial performance. This study contributes to the financial literature on managerial myopia by analyzing the influence of managerial myopia on financial performance, thereby increasing understanding of the phenomenon of managerial myopia in microfinance institutions, where previous research was still limited. Managers can easily use the indicators we developed to assess managerial myopia as metrics for each type of myopia. These empirical results serve as an impetus for myopic managers to redirect their behavior and help convince sustainability-oriented managers to stay on track.

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Myopic Management Theory and R&D Investment Decisions

Cited by 2 publications

References 0 publications

The long‐run role of innovation in the IPO market: inhibition or promotion?

The long‐run role of innovation in the IPO market: inhibition or promotion?

Managerial Myopia Control to Improve Financial Performance in Microfinance Institutions

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