Managerial Opportunism and Corporate Investment Efficiency

Abstract

Abstract Our study investigates how managerial opportunism, measured by executives' insider trading, affects corporate investment efficiency and performance. We find that such opportunism undermines investment efficiency, with distortions in financial reporting quality serving as a channel of influence. Furthermore, our analysis reveals that this impact varies depending on the strength of governance structures. We also observe a negative association between managerial opportunism and accounting performance metrics, as well as risk‐adjusted stock returns. Our findings are robust across various model specifications and measurements, emphasizing the significance of managerial opportunism as a personality trait in corporate decision‐making.

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