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Overconfidence and Early-life Experiences: The Impact of Managerial Traits on Corporate Financial Policies
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This article found that managers who believe that their firm is undervalued view external financing as overpriced, especially equity, and use less external finance and, conditional on accessing risky capital, issue less equity than their peers.Abstract:
We show that measurable managerial characteristics have significant explanatory power for corporate financing decisions beyond traditional capital-structure determinants First, managers who believe that their firm is undervalued view external financing as overpriced, especially equity Such overconfident managers use less external finance and, conditional on accessing risky capital, issue less equity than their peers Second, CEOs with Depression experience are averse to debt and lean excessively on internal finance Third, CEOs with military experience pursue more aggressive policies, including heightened leverage Complementary measures of CEO traits based on press portrayals confirm the resultsread more
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Does top executives' US experience matter? Evidence from US-listed Chinese firms
TL;DR: In this article, the authors used US-listed Chinese firms as their research sample and found that firms that hire top executives with work experience in the US or educational qualifications from the US attract more US institutional investors and analysts.
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The Intangibles Song in Takeover Announcements: Good Tempo, Hollow Tune
TL;DR: The authors developed a word list of intangibles and applied it to takeover announcements and found that deals with more "intangibles talk" complete more quickly than deals presented with less intangible talk.
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Socioeconomic Status and Macroeconomic Expectations
TL;DR: This paper found that individuals' macroeconomic expectations are influenced by their socioeconomic status (SES), which helps explain why higher-SES individuals are more inclined to invest in the stock market and more likely to consider purchasing homes, durable goods, or cars.
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Recession managers and mutual fund performance
TL;DR: This paper found that fund managers who began their careers during recessions produce superior returns, but this superior performance is not unconditional, as they exhibit better market timing than their non-recession counterparts in recessions, but do not demonstrate better stock picking in booms.
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Why Do Some CEOs Work for a One-Dollar Salary?
TL;DR: The authors found evidence consistent with the view that $1 CEO salaries are a ruse hiding the rentseeking pursuits of CEOs adopting these pay schemes, and they found that shareholders of firms with $1 CEOs salaries do not fare well in the aftermath of these adoptions.
References
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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
What Do We Know About Capital Structure? Some Evidence from International Data
Raghuram G. Rajan,Raghuram G. Rajan,Raghuram G. Rajan,Luigi Zingales,Luigi Zingales,Luigi Zingales +5 more
TL;DR: In this paper, the authors investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries and find that factors identified by previous studies as important in determining the cross-section of the capital structure in the U.S. affect firm leverage in other countries as well.
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Unrealistic optimism about future life events
TL;DR: In this article, the authors investigated the tendency of people to be unrealistically optimistic about future life events and found that degree of desirability, perceived probability, personal experience, perceived controllability, and stereotype saliency would influence the amount of optimistic bias evoked by different events.
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The Hubris Hypothesis of Corporate Takeovers
TL;DR: The hubris hypothesis is advanced as an explanation of corporate takeovers by Jensen and Ruback as mentioned in this paper, who argued that the evidence supports the hubris hypotheses as much as it supports other explanations such as taxes, synergy, and inefficient target management.
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Debt and taxes
TL;DR: Miller et al. as discussed by the authors presented a paper on the thirty-fiveth annual meeting of the American Finance Association, Atlantic City, New Jersey, September 16-18, 1976 (May, 1977), pp. 261-275.