We examine the likelihood that US Internal Revenue Service (IRS), in its enforcement role, will accord particular attention to firms are managed by CEOs who exhibit over-confidence, given such may be more aggressive their tax policies and strategies. Using data from 7757 firms, we find this is indeed case. Such even pronounced instance of overconfident whose financially constrained and/or distr...

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 person...

This article presents the growing research area of Behavioural Corporate Finance in the context of one specific example: distortions in corporate investment due to CEO overconfidence. We first review the relevant psychology and experimental evidence on overconfidence. We then summarise the results of Malmendier and Tate (2005a) on the impact of overconfidence on corporate investment. We present...

This theoretical article introduces the construct of CEO celebrity in order to explain how the tendency of journalists to attribute a firm’s actions and outcomes to the volition of its CEO affects such firm. In the model developed here, journalists celebrate a CEO whose firm takes strategic actions that are distinctive and consistent by attributing such actions and performance to the firm’s CEO...

The purpose of the study is to extend further from the result studying overconfidence effects of CEOs on single deal of Malmendier and Tate (2008)’s article to study overconfidence effects of CEOs on multiple mergers and acquisitions. Based on the psychological and financial theories, the likelihood of overconfident CEOs acquiring a company is the net effect of two manifestations of overconfide...

We examine how the level of chief executive officer (CEO) overconfidence might affect a borrowing firm's ex ante covenant intensity and post violations. find that overconfident CEOs are less effective in steering firm away from unfavorable opportunistic behavior, hence creditors include more stringent restrictions loan contracts their firms. The interpretational bias other positive illusions co...