We extend the original work of Malmendier and Tate (2008) to cover the full spectrums of firm size, and a recent time period that includes the 1998-2001 merger wave. In particular, we explore the impact of target firm CEO overconfidence on firm M&A performance and the general impact of CEO overconfidence on firm long run post-M&A stock returns. We also examine the differential impact of CEO ove...

We propose a novel approach to evaluating the empirical importance of individual managerial characteristics: We analyze different managerial positions (CEO and CFO) jointly and ask whether a managerial bias (overconfidence) matters for decisions under the control of the manager, but not for decisions outside the manager’s core duties. Using a new data set on CEO and CFO overconfidence, we show ...

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...

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...

=709861. Malmendier, U., G. A. Tate. 2005b. CEO overconfidence and corporate investment. J. Finance 6

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...

This paper introduces a new measure of management overconfidence, overconfident tone, and shows its association with excess investments, larger share repurchases, and higher stock portions in CEO compensations. Overconfident tone is composed of abnormal positivity and abnormal certainty. They are calculated by dividing conference call transcripts into management parts and analyst parts, and sep...