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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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Testing Trade-Off and Pecking Order Predictions about Dividends and Debt
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Learning from Inflation Experiences
Ulrike Malmendier,Stefan Nagel +1 more
TL;DR: In this article, the authors proposed that individuals overweight inflation experienced during their lifetimes and modifies existing adaptive learning models to allow for age-dependent updating of expectations in response to inflation surprises.
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Executive Overconfidence and the Slippery Slope to Financial Misreporting
TL;DR: In this article, a detailed analysis of 49 firms subject to AAERs suggests that approximately one-quarter of the misstatements meet the legal standards of intent, while the remaining three quarters reflect an optimistic bias that is not necessarily intentional.
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A Female Style in Corporate Leadership? Evidence from Quotas
TL;DR: In this paper, the authors examined the impact of gender quotas for corporate board seats on corporate decisions and found that affected firms undertook fewer workforce reductions than comparison firms, increasing relative labor costs and employment levels and reducing short-term profits.
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CEO Gender, Corporate Risk-Taking, and the Efficiency of Capital Allocation
TL;DR: In this paper, the authors extend the literature on how managerial traits relate to corporate choices by documenting that firms run by female CEOs have lower leverage, less volatile earnings, and a higher chance of survival than otherwise similar firms running by male CEOs, and that transitions from male to female CEOs are associated with economically and statistically significant reductions in corporate risk-taking.
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