Managerial Duties and Managerial Biases

Much of the evidence on managerial biases in corporate finance focuses CEO and, particular, overconfidence. This singular focus can lead to misattribution as it ignores roles other managers who are responsible for a given outcome. We evaluate influence CFO and C-suite executives compared with CEO. Mirroring widely used Longholder measure overconfidence, we construct Other measures. For financing decisions, find that overconfidence becomes an insignificant predictor most decisions when included jointly proxy, whereas has strong predictive power. The reverse holds nonfinancing decisions: beliefs predict risk return investment projects thus, their cost well acquisitions. managers’ is not significant either these two realms. does remain even subsample firms “powerful” (entrenched) CEOs. also show overconfident CEOs tend hire CFOs, which generates multiplier effect explains analyses do account managers. Our results imply need identify dominant decision makers respective influence. paper was accepted by Victoria Ivashina, finance. Supplemental Material: online appendix data available at https://doi.org/10.1287/mnsc.2022.4467 .