Relationship between manager overconfidence and research and development spending with emphasis on related party transactions in pharmaceutical companies listed on the Tehran Stock Exchange

The need for medicine and medical services is one of the basic needs in today's society. In order to meet these needs and provide the desired budget, companies are required to invest in research and development, which allocation and decision on these resources and budgets to achieve the desired goals are among the duties of managers and also Dealing with affiliates because of specific policies and perspectives can influence research and development decisions and managers' distrust. This was an applied descriptive correlational study. In order to achieve the goal of the research, 21 pharmaceutical companies were selected from the companies listed on the Tehran Stock Exchange from 2010 to 2018. Multivariate regression model was used to test the research hypotheses and generalized least squares method was used for fitting the regression model. The findings suggest that there was a positive and significant relationship between manager overconfidence and research and development spending. Related party transactions weaken the relationship between manager overconfidence and research and development spending. The findings of the present study showed that due to the fact that medicine and treatment play an important role in today's societies, the existence of overconfident managers leads to more budget allocation to research and development spending. The incentive to invest in research and development spending is reduced to such an extent through related party transactions that it can be effective in implementing these tasks.