The Role of State Ownership on the relationship between Confucianism Culture (Managers) and Corporate Over-Investment

Investment plays an important and key role in economic growth and development. One of the basic components that has an undeniable effect on the subject of investment is the phenomenon of Confucianism culture. According to research Jebran and et al (2019), one of the factors that can affect the corporate investment inefficiency, is the Confucianism culture (managers), which has not been considered in the financial and accounting research literature. Confucianism culture as an informal institution reduces representation problems and curbs over-managerial behaviors. Also, state ownership as corporate governance can attenuation the link between the Confucianism culture and over-investment. Therefore, the purpose of this research is to investigate the role of State Ownership on the relationship between Confucianism Culture (Managers) and Corporate Over-Investment. The research method is descriptive-correlation and the analysis of research hypotheses has been done using logit regression method. The present research is applied in terms of purpose. The number of statistical research samples of 132 listed companies in the period 2010 to 2020, which has been selected using systematic elimination sampling method. To measure the Confucianism Culture, the criterion of Geographical Proximity-Based from model Du (2015) has been used. The results show that there is a positive and significant relationship between the Confucianism Culture and over-investment and state ownership intensifies the relationship between the Confucianism Culture and Corporate Over-Investment. With the rise of the phenomenon of Confucianism Culture, the investment behavior of companies leads to non-optimal; this means that the closer the Corporate are to the cultural centers in terms of Geographical Proximity-Based, the managers of Iranian companies cannot correctly identify valuable investment opportunities (projects with positive net present value) in the market and invest properly that this becomes more challenging with government intervention, and as a result, investors are harmed and social resources are wasted.