CEO overconfidence and the value of corporate cash holdings

Please use this identifier to cite or link to this item: https://hdl.handle.net/20.500.14279/13651

Title:	CEO overconfidence and the value of corporate cash holdings
Authors:	Aktas, Nihat Louca, Christodoulos Petmezas, Dimitris
Major Field of Science:	Social Sciences
Field Category:	Economics and Business
Keywords:	Overconfidence;Innovation;Managerial overconfidence
Issue Date:	Feb-2019
Source:	Journal of Corporate Finance, 2019, vol. 54, pp. 85-106
Volume:	54
Start page:	85
End page:	106
Journal:	Journal of Corporate Finance
Abstract:	Cash holding is on average more valuable when firms are managed by overconfident CEOs. Economically, having an overconfident CEO on board is associated with an increase of $0.28 in the value of $1.00 cash holding. The positive effect of CEO overconfidence on the value of cash concentrates among firms that are more likely to suffer from the underinvestment problem (i.e., financially constrained firms which exhibit high growth opportunities). In addition, CEO overconfidence affects negatively the value of cash in firms that are financially unconstrained, a finding which is consistent with the overinvestment hypothesis. The results are robust to various tests and alternative explanations.
ISSN:	09291199
DOI:	10.1016/j.jcorpfin.2018.11.006
Rights:	© Elsevier
Type:	Article
Affiliation :	WHU Otto Beisheim School of Management University of Surrey Cyprus University of Technology
Appears in Collections:	Άρθρα/Articles

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