Open AccessPosted Content
CEO Overconfidence and Corporate Investment
Ulrike Malmendier,Geoffrey Tate +1 more
TLDR
In this paper, the authors argue that managerial overconfidence can account for corporate investment distortions and find that investment of overconfident CEOs is significantly more responsive to cash flow, particularly in equity-dependent firms.Abstract:
We argue that managerial overconfidence can account for corporate investment distortions. Overconfident managers overestimate the returns to their investment projects and view external funds as unduly costly. Thus, they overinvest when they have abundant internal funds, but curtail investment when they require external financing. We test the overconfidence hypothesis, using panel data on personal portfolio and corporate investment decisions of Forbes 500 CEOs. We classify CEOs as overconfident if they persistently fail to reduce their personal exposure to company-specific risk. We find that investment of overconfident CEOs is significantly more responsive to cash flow, particularly in equity-dependent firms.read more
Citations
More filters
Journal ArticleDOI
Managing with Style: The Effect of Managers on Firm Policies
TL;DR: In this paper, the authors investigate whether and how individual managers affect corporate behavior and performance and show that managers with higher performance effects receive higher compensation and are more likely to be found in better governed environments.
Journal ArticleDOI
Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?*
Ulrike Malmendier,Stefan Nagel +1 more
TL;DR: The authors investigate whether differences in individuals' experiences of macroeconomic shocks affect long-term risk attitudes, as is often suggested for the generation that experienced the Great Depression, and find that birth-cohorts that have experienced high stock market returns throughout their life report lower risk aversion, are more likely to be stock market participants, and if they participate, invest a higher fraction of liquid wealth in stocks.
Journal ArticleDOI
Flawed Self-Assessment Implications for Health, Education, and the Workplace
TL;DR: Empirical findings on the imperfect nature of self-assessment are reviewed and several interventions aimed at circumventing the consequences of such flawed assessments are discussed; these include training people to routinely make cognitive repairs correcting for biasedSelf-assessments and requiring people to justify their decisions in front of their peers.
Journal ArticleDOI
Women in the Boardroom and Their Impact on Governance and Performance
TL;DR: This article found that female directors have better attendance records than male directors, male directors have fewer attendance problems the more gender-diverse the board is, and women are more likely to join monitoring committees.
Journal ArticleDOI
It's All about Me: Narcissistic Chief Executive Officers and Their Effects on Company Strategy and Performance:
TL;DR: In this paper, the authors used unobtrusive measures of the narcissism of chief executive officers (CEOs) such as the prominence of the CEO's photograph in annual reports, CEO's prominence in press releases, and CEO's...
References
More filters
Journal ArticleDOI
The Pricing of Options and Corporate Liabilities
Fischer Black,Myron S. Scholes +1 more
TL;DR: In this paper, a theoretical valuation formula for options is derived, based on the assumption that options are correctly priced in the market and it should not be possible to make sure profits by creating portfolios of long and short positions in options and their underlying stocks.
Journal Article
The Cost of Capital, Corporation Finance and the Theory of Investment
TL;DR: In this article, the effect of financial structure on market valuations has been investigated and a theory of investment of the firm under conditions of uncertainty has been developed for the cost-of-capital problem.
Posted Content
A Survey of Corporate Governance
TL;DR: The authors surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world, and presents a survey of the literature.
Posted ContentDOI
Credit Rationing in Markets with Imperfect Information.
Joseph E. Stiglitz,Andrew Weiss +1 more
TL;DR: In this paper, a model is developed to provide the first theoretical justification for true credit rationing in a loan market, where the amount of the loan and amount of collateral demanded affect the behavior and distribution of borrowers, and interest rates serve as screening devices for evaluating risk.
Book
The Modern Corporation and Private Property
TL;DR: Weidenbaum and Jensen as mentioned in this paper reviewed the impact of developments not fully anticipated by Berle and Means, such as the rise of the service sector, and the significant role played by institutional investors in the owner/manager equation.