Drivers of Managers' Inertia in Response to Reliable Disclosure of Information

Rahmani, Mohsen; Ashrafi, Majid; Sayeedi, Parviz; Gorganli Davaji, Jamadori

doi:10.61186/ijf.2024.354110.1359

Drivers of Managers' Inertia in Response to Reliable Disclosure of Information

Document Type : Original Article

Authors

Mohsen Rahmani ¹

Majid Ashrafi ²

Parviz Sayeedi ³

Jamadori Gorganli Davaji ⁴

¹ Ph.D. Candidate, Department of Financial Engineering, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.

² Assistant Prof., Department of Accounting, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.

³ Prof., Department of Management and Accounting, Ali Abad Katoul Branch, Islamic Azad University, Ali Abad Katoul, Iran.

⁴ Assistant Professor, Department of Accounting, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.

10.61186/ijf.2024.354110.1359

Abstract

The flow of information in the capital market is strategically important because it determines the path of investors' decisions. In this decision-making process, the managers of the companies can disclose timely and reliable information based on their cognitive and perceptual characteristics of capital market situations. This article aims to contribute to the capital market knowledge literature by presenting the framework of managers' inertia drivers in response to reliable disclosure of information. This study adopted mixed, both inductive and deductive approaches to develop an integrated framework, validate its practicability, and verify its effectiveness in selected firms listed on the Tehran Stock Exchange, respectively. In developing the framework and implementation procedure, the study employed a systematic screening data collection (qualitative) approach to review the managers' inertia drivers. Then, in this study's second phase, the Interpretive Rating Process (IRP) and Fuzzy Reference System are used to develop the framework of managers' inertia drivers in response to reliable disclosure of information. The study's results in the qualitative part indicate the determination of 8 driving areas of managers' inertia in the reliable disclosure of information. On the other hand, the quantitative section results showed that managers' overconfidence and excitability are the most influential fields in stimulating managers' inertia in the timely disclosure of information. Based on the results, it was determined that the excitability of managers' overconfidence in creating inertia causes managers' subjective estimates to cause exclusivity in information disclosure.

Keywords

Managers' Inertia

Reliable Information Disclosure

Interpretive Rating Process (IRP)

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