Managerial overconfidence and the buyback anomaly

Counterparty Responses to Managerial Overconfidence

Existing research links CEO personality traits to a number of corporate decisions including overinvestment, external acquisitions, and earnings management. These findings raise the question of whether counterparties distinguish between differences in individual CEO behavior, and how they respond to it. We focus on two key counterparties – auditors and credit rating agencies – and examine whethe...

Managerial Overconfidence and Bank Risk Taking: A Cross-Country Analysis

This paper examines the effects of managerial overconfidence on bank risk taking and investigates whether improvements in governance can help to mitigate the adverse effects of managerial overconfidence on bank risk taking by using ordinary least squares method. The sample consists of the financial institutions in G20 and Taiwan over the period of 2005-2012. The executive overconfidence is meas...

Managerial Overconfidence , Agency Problems , Financing Decisions and Firm Performance

Overconfidence and Early-life Experiences: The Effect of Managerial Traits on Corporate Financial Policies

We show that measurable managerial characteristics have significant explanatory power for corporate financing decisions. First, managers who believe that their firm is undervalued view external financing as overpriced, especially equity financing. Such overconfident managers use less external finance and, conditional on accessing external capital, issue less equity than their peers. Second, CEO...

Managerial Optimism, Overconfidence and Board Characteristics: Toward a New Role of Corporate Governance

The aim of this paper is to discuss the effect of corporate governance mechanisms on controlling CEOs’ emotions and some behavioral biases. Departing from a sample of 40 public traded Tunisian firms, we test the impact of the board of directors on managing CEO’s irrationalities. Our results highlight strong evidence on the role of the board characteristics, especially the board independence, a ...