Are CEOs’ attitudes and beliefs linked to their firms’ innovative performance? This paper uses Malmendier and Tate’s measure of overconfidence, based on CEO stockoption exercise, to study the relationship between a CEO’s “revealed beliefs” about future performance and standard measures of corporate innovation. We begin by developing a career concern model where CEOs innovate to provide evidence...

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 financin...

Does culture shape risk preferences? While economic models of the origins of preferences point to an important role of culture, supporting empirical evidence is largely missing for risk and time preferences. In this study, we exploit variation in cultural heritage across CEOs of public U.S. companies and demonstrate an important effect of CEOs’ culturally transmitted risk preferences on corpora...

This study adds to the literature demonstrating the adverse market reaction to acquisitions by overconfident CEOs (e.g., Malmendier and Tate, 2008). In particular, it explores the parallel role played by overconfident target firm CEOs in explaining the premium paid, and value destruction in such deals, and, most importantly, the “perfect storm” of the interaction between the two overconfident p...

We compare the proceeds that CEOs realize from exercising stock options with the total nominal value (estimated fair value) of option pay that they receive during their tenures. For a sample of CEOs who completed their tenures during the period from 1992 to 2007, we find that the amount realized from exercising options is about 68% of the nominal value of options received and that realized tota...

Previous theoretical and empirical studies suggest that CEOs' political connections are valuable to firms. We examine whether such connections become entrenched if the expected political capital fails to materialize and the firm lacks other types of political power. Using a sample of listed non-SOEs in China, we show that politically connected CEOs have a lower probability of turnover and cause...

I examine the role of CEO speaking style on market valuation of their firms. Analyzing and quantifying the speaking style of CEOs using Flesch Kincaid Grade Level, a measure of speech sophistication, I find that verbal ability is correlated to the education levels of CEOs. I also find that after controlling for industry specific differences in CEO speaking style, the market places a higher valu...