The Efficiency of Inventory Management and Financial Distress: The Interactive Role of Management Behavioral Strains

Document Type : Research Paper

Authors

1 Assistant Professor in Accounting, Faculty of Economics and Management, Urmia University, Urmia, Iran

2 M.S. in Management Accounting, Faculty of Economics and Management, Urmia University, Urmia, Iran

Abstract

The objective of this study was to examine the effect of inventory management on financial distress with respect to the interactive role of management behavioral strains, namely overconfidence, myopia, and narcissism. The data of the study was comprised of 346 year-distressed company and 346 year-healthy company for overconfidence, 356 year-distressed company and 356 year-healthy company for myopia, and 228 year-distressed company and 228 year-Health Company for narcissism, chosen from the companies listed in Tehran Stock Exchange through the years 2009 to 2019. To distinguish the healthy companies from the distressed companies, the model developed by Asquith et al. (1994) was used. Findings of the study showed that the increase of inventory management efficiency leads to decreased financial distress, and the behavioral strains do not have a significant effect on the change of such a relationship.

Keywords

Main Subjects


Article Title [فارسی]

کارایی مدیریت موجودی کالا و درماندگی مالی – نقش تعاملی سویه‌های رفتاری مدیریت

Authors [فارسی]

  • فرزاد غیور 1
  • مهدیه حیدری فراهانی 2
  • سهراب شاهی 2
1 استادیار گروه حسابداری، دانشکده اقتصاد و مدیریت، دانشگاه ارومیه، ارومیه، ایران
2 کارشناسی ارشد حسابداری مدیریت، دانشکده اقتصاد و مدیریت، دانشگاه ارومیه، ارومیه، ایران
Abstract [فارسی]

پژوهش حاضر به بررسی تأثیر کارایی مدیریت موجودی کالا بر درماندگی مالی با نقش تعاملی سویه‌های رفتاری مدیریت (بیش اطمینانی، کوته‌بینی و خودشیفتگی) پرداخته است . داده‌های پژوهش شامل 346 سال-شرکت درمانده و 346 سال -شرکت سالم برای بیش اطمینانی، 356 سال- شرکت درمانده و 356 سال – شرکت سالم برای کوته‌بینی، 228 سال- شرکت درمانده و 228 سال- شرکت سالم برای خودشیفتگی از مجموعه شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران در محدوده زمانی 1387 تا 1397 انتخاب‌شده است. برای تفکیک شرکت‌های سالم و درمانده از مدل آسکویت و همکاران (1994) استفاده شد. یافته‌های پژوهش نشان می‌دهد که کارایی مدیریت موجودی کالا تأثیر منفی و معناداری بر احتمال مواجهه با درماندگی مالی دارد. کوته‌بینی موجب افزایش کارایی مدیریت موجودی کالا و خودشیفتگی و بیش اطمینانی آن می‌شود، که معنادار نیستند. نتایج نشان داد با افزایش کارایی مدیریت موجودی کالا، درماندگی مالی کاهش می‌یابد و سویه‌های رفتاری تأثیر معناداری بر تغییر این رابطه ندارند.

Keywords [فارسی]

  • کارایی مدیریت موجودی کالا
  • درماندگی مالی
  • بیش اطمینانی
  • کوته‌بینی
  • خودشیفتگی
Afrifa, G. A., Alshehabi, A., Tingbani, I., & Halabi, H. (2020). Abnormal inventory and performance in manufacturing companies: Evidence from the trade credit channel. Rev Quant Finan Acc, 56, 581–617. https://doi.org/10.1007/s11156-020-00903.
Ahmed, A., & Duellman, S. (2012). Managerial overconfidence and accounting conservatism. Journal of Accounting Research, 51, 1–30.
Aliakbarlou, A., Mansourfar, G., & Ghayour, F. (2020). Comparing the identifying criteria for financially distressed companies using logistic regression and artificial intelligence methods. Journal of Financial Management Perspective, 29, 147-166.
Anderson, T, W., & Hsiao, C. (1982). Formulation and estimation of dynamic models using panel data. Journal of Econometrics, 18(1), 47-82.
Asquith P, Gertner. R., & Scharfstein, D. (1994). Anatomy of financial distress: An examination of junk-bond issuers. Quarterly Journal of Economics, 109(3), 1189-1222.
Ben-David, I., Graham, J. R., & Harvey, C. R. (2010). Managerial miscalibration. The Quarterly Journal of Economics, 128(4), 1547–1584. https://doi.org/10.1093/qje/qjt023.
BenMohamed, E., Fairchild, R., & Bouri, A. (2014). Investment cash flow sensitivity under managerial optimism: New evidence from NYSE panel data firms. Journal of Economics, Finance and Administrative Science, 19, 11–18
Bon Kim, J., & Zhang, L. (2013). Financial Reporting opacity and expected crash risk: Evidence from implied volatility smirks. Contemporary Accounting Research, 13(3), 851-875. https://doi.org/10.1111/1911-3846.12048.
Chalaki, P., Mansourfar, G., & Karami, A. (2018). Review the effect of management ability on the financial distress, with an emphasis on financial flexibility in Tehran Stock Exchange listed companies. Journal of Financial Accounting Knowledge, 5(1), 153-180.
Chowdhury, J. (2012). Managerial myopia: A new look. SSRN Electronic Journal. 10.2139/ssrn.1991429.
Deveshwar, A., & Dhawal, M. (2013). Inventory management delivering profits through stock management. World Trade Centre, Dubai: Ram University of Science and Technology.
De Vries, J. (2005). The complex relationship between inventory control and organisational setting: Theory and practice. International Journal of Production Economics, 93, 273-284.
Didar, H., Heydari, M., & Pourasad, S. (2018). Impact of myopic management on efficiency of companies with moderating role of corporate governance quality in companies in Tehran Stock Exchange. Journal of Accounting Knowledge, 9(1), 147-169.
Elsayed, Kh., & H. Wahba. (2013). Reinvestigating the relationship between ownership structure and inventory management: A corporate governance perspective. International Journal of Production Economics,  207-218.
Foster, J. D. Reidy, D. E. Misra, T. A., & Goff, J. S. (2011). Narcissism and stock market investing: Correlates and consequences of cocksure Investing. Personality and Individual Differences, 50 (6), 816-821.
Gholipor, A., Khanifar, H., & Fakheri Koozeh kanan, S. (2009). Effects of manager’s narcissism on organizational disturbance. Organizational Culture Management, 6(18), 79-93.
 
 
Jia, Y. van Lent, L., & Zeng Y, (2014). Masculinity, testosterone, and financial misreporting, Journal of Accounting Research, 52(5), 1195-1246.
Karimzadeh, H., & Taheri Nia, M. (2016). Investigating the relationship between inventory management measurement indicators and profitability of companies listed on the Tehran Stock Exchange. Economic Studies, Financial Management and Accounting, 2(3), 22-1.
Kangogo, C. C., & Irungu, A. M. (2020). Inventory conversion period and financial performance of selected firms listed at Nairobi Securities Exchange. Journal of Finance and Accounting, 4(5), 55-76.
Khajavi, S., Dehghani Sa’di, A., & Gerami Shirazi, F. (2017). CEO narcissism impacts on earnings management and financial performance. Journal of Accounting Advances, 8(2), 123-149.
Lari Dashtbayaz, M., Salehi, M., Mirzaei, A. & Nazaridavaji, H. (2020), The impact of corporate governance on intellectual capitals efficiency in Iran. International Journal of Islamic and Middle Eastern Finance and Management, 13(4), 749-766.
Leng, J., Ozkan, A., Ozkan, N., Trzeciakiewicz, A. (2021), CEO overconfidence and the probability of corporate failure: evidence from the United Kingdom, The European Journal of Finance, 27(12), 1210-1234.
Levinthal, D. A., & March, J. G. (1993). The myopic of learning. Strategic Management Journal, 14(S2), 95-112.
Malmendier, U. & Tate, G. (2005). CEO overconfidence and corporate investment. European Financial Management, 11(5), 649-659.
Mansourfar, G., Ghayour, F., & Lotfi, B. (2015). The ability of Support Vector Machine (SVM) in financial distress prediction. Empirical Research in Accounting, 5(3), 177-195.
Mashayekh, S., & Behzadpur, S. (2014). The effect of managers’ overconfidence on dividend policy in the firms listed in Tehran stock market. Accounting and Auditing Review, 21(4), 485-504.
Moradi, J., & Bagheri, H. (2014). A comparative investigation into the effects of management myopic and earnings management on stock return. Accounting and Auditing Review, 21(2), 229-250.
Mundi, H. S., & Kaur, P. (2019). Impact of CEO Overconfidence on Firm Performance: An Evidence from S&P BSE 200. Psychological Science, 23(3), 770–780.
Najafi, N., & Tootian Esfahani, S. (2020). The effect of forward-looking and defensive strategy on financial distress in companies listed on the Tehran Stock Exchange. Business Management Quarterly, 45, 335-351.
Namazi, M., Dehghani Saad, A., & Ghoohestani, S. (2017). CEO narcissism and business strategy. Journal of Management Accounting and Auditing Knowledge, 6(22), 37-52.
Namazi, M., Zare Hossein Abadi, A., & Ghaffari, M. (2012). Investigating the relationship between changes in inventory, profitability and value of companies listed in Tehran Stock Exchange. Journal of Financial Accounting Research, 4(2), 1-18.
Nikbakht, M, R., Rahmani, A., & Sadr Ara, M. (2017). The evaluation of inventory management with behavioral approach. Journal of Value & Behavioral Accounting, 1(2), 97-126.
Novin Nam, G, A., Shokrkon, H., & Mehrabizadeh Artist, M. (2001). Investigating the relationship between personality traits and leadership styles of managers. Journal of Educational Sciences and Psychology, 8(3), 106-87.
Salehi, M., & Davoudi Pour, M. (2016). Bankruptcy prediction of listed companies on the Tehran Stock Exchange. International Journal of Law and Management, 58(5), 545-561.
Salehi, M., Lotfi, A. and Farhangdoust, S. (2017). The effect of financial distress costs on ownership structure and debt policy: An application of simultaneous equations in Iran. Journal of Management Development, 36(10), 1216-1229.
Salehi, M., & Shiri, M. (2016). Different bankruptcy prediction patterns in an emerging economy: Iranian evidence. International Journal of Law and Management, 58, 258-280.
Salehi, M., & Shiri, M., & Bolandraftar, M. (2016). Predicting corporate financial distress using data mining techniques: An application in Tehran Stock Exchange. International Journal of Law and Management, 58, 216-230.
Steinker, S., Pesch, M., & Hoberg, K. (2016). Inventory management under financial distress: An empirical analysis. International Journal of Production Research, 54, 1-26.
Udenio, M., Hoberg, K., & Fransoo, J. (2018). Inventory agility upon demand shocks: Empirical evidence from the financial crisis. Journal of Operations Management, 62, 16-43.
Wang, Y., & Zhou, Y. (2017). The role of managers’ overconfidence on the irrational investment. 14th International Conference on Service Systems and Service Management,  , 1-5. https: //doi.org/10.1109/ICSSSM.2017.7996241
Zalaghi, H., Maddadian Moez, R., & Kamareh Gereh, M. (2021). The effect of inventory management efficiency and trade credit on the capital structure stability. Asset Management and Financing, 8(31), 85-100.
Zamani A., Mahmoudi, A., & Jafari, H. R. (2019). The effect of inventory management on the financial performance of financially helpless companies in the Tehran Stock Exchange. Studies, Economics, Financial Management and Accounting, 5(4), 10-23.