1. UKM Learning and Research Repository
2. PHD Thesis / Tesis PHD
3. Graduate School of Business / Pusat Pengajian Siswazah Perniagaan

Title:	The effect of manager's perceived competition and overconfidence on capital structure : a text mining approach on chairman's statement
Authors:	Hanandewa (ZP00617)
Supervisor:	Fauzias Mat Nor, Prof. Dr.
Keywords:	Universiti Kebangsaan Malaysia -- Dissertations Dissertations, Academic -- Malaysia
Issue Date:	25-Oct-2019
Description:	This study aims to examine the validity of limited liability effect theory, using ex-ante measure of product-market competition, and to investigate the validity of managerial overconfidence hypothesis, using direct measure of manager's sentiment, as a framework for analyzing capital structure determinants of Malaysian firms. The limited liability theory argues that given tougher competitive environment and debt has limited liability effect, hence debt induces managers to pursue riskier projects. Despite its consistency with the underpinning models, studies that test the validity of limited liability effect theory using measure for future product-market competition are not yet to be found in the literature. This study endeavors to fill this gap in the literature by suggesting a new measure of product-market competition. The new measure proposes that proxy for product-market competition is at firm-level because competition intensity depends on manager's perception that incorporates uncertainty on future competition and current condition of the firm. Among corporate disclosure that contain forward looking information regarding competitive behavior at firm level is the chairman's statement section of annual report. And unlike measures for product-market competition existing in the literature that rely on ex-post data, the new measure uses ex-ante data that conform limited liability effect theory models. The findings suggest that manager's perceived competition does have positive relationship on the changes in firm's leverage. Moreover, behavioral finance has begun to take a more prominent position in attempting to explain aspects of finance that traditional research has failed to explain. Hubris theory argues that managerial overconfidence could affect corporate decisions. An overconfident manager overestimates his ability, and underestimates the financial distress costs. Therefore, managerial overconfidence hypothesis predicts that there is a positive relationship between overconfidence and debt level. However, the majority empirical studies use indirect approach to measure managerial overconfidence, and only few, not to say none, to use direct approach that directly inferring manager beliefs from company disclosures. This research presents the use of text mining application in finance area. Text mining approach is used to extract manager's perceived competition and overconfidence in the chairman's statement. Using data from 398 Malaysian acquirer companies engaged in 453 horizontal acquisitions for 2001 to 2012 period, to better capture the effect of competition on manager's disclosure. The findings suggest that manager's perceived competition does have positive relationship on the changes in firm's leverage. Thus, this study confirms the limited liability effect theory in the context of developing country. Furthermore, the findings suggest that managerial overconfidence is negatively related to the changes in debt level. Even though this is contradicting with the managerial overconfidence hypothesis, but it support the signaling theory. Finally, this study represents one of the first textual analysis study in corporate finance in Malaysian setting.,Ph.D
Pages:	199
Publisher:	UKM, Bangi
Appears in Collections:	Graduate School of Business / Pusat Pengajian Siswazah Perniagaan

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.