ceo overconfidence and overinvestment: role of exchange rate

The existence of financial anomalies, which challenge the efficient-market hypothesis, provides substantial experimental evidence of market deviations from rationality. according to the efficient-market hypothesis, investors incorporate all available market information and diligently interpret it. however, empirical evidence demonstrates that most investors fail to engage in rigorous information processing, leading to various behavioral theories highlighting market inefficiency and biased information processing. this research aims to identify and examine the impact of ceo perceptual biases on judgment and economic decision-making, specifically focusing on the reporting quality of firms listed on the tehran stock exchange. the study investigates the relationship between ceo overconfidence and overinvestment with the role of economic moderators on the tehran stock exchange (tse). a sample size of one hundred and five companies was selected using systematic removal sampling, covering the period from 2012 to 2019. given the dichotomous dependent variable, this study employs probit regression to test the research hypotheses. the results indicate a significant positive effect of ceo overconfidence on overinvestment. additionally, it is observed that the exchange rate strengthens the positive effect of ceo overconfidence on over investment. based on these findings, the ceo's decisions as the primary decision maker within a company, particularly in inflationary conditions, can significantly impact future corporate investment levels. the findings further reveal that the indices of ceo perceptual biases in judgment and economic decision-making have a significantly negative effect on the reliability and competitiveness of financial reporting.