Overconfident CEOs over-estimate their ability to generate returns. Thus, on the margin, they undertake mergers that destroy value. They also perceive outside finance to be over-priced. We classify CEOs as overconfident when, despite their under-diversification, they hold options on company stock until expiration. We find that these CEOs are more acquisitive on average, particularly via diversi...

As a well-studied executive bias, CEO overconfidence usually has negative connotations – although empirical evidence of its performance effects remains inconclusive. By theorizing on in turnaround situation, we propose that can either help or hinder performance, depending whether the overconfident is incumbent who steered firm into dire straits, successor hired during decline. Our findings sugg...

This paper aims to enrich the behavioral theory of international business strategy by investigating how CEO hubris (i.e., excess pride and confidence) affects strategic choices, that is, location selection, entry timing, modes into target market. Specifically, we focus on relationship between cultural distance choices consider as a mechanism influences CEOs' decisions. Our conceptual framework ...

This paper offers a continuous time, general equilibrium model where a risky asset is traded among risk-averse overconfident investors. Two kinds of overconfidence are introduced: investors exhibit relative overconfidence if each investor believes her model is better than others’ and aggregate overconfidence if they believe signals have more information content than those in the true model. Rel...

Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue that the connection between overconfidence and innovation is more complex than the previous literature suggests. In particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on innovative activity. While overoptimism ...

This chapter describes two experiments that examined overconfidence in spreadsheet development. Overconfidence has been seen widely in spreadsheet development and could account for the rarity of testing by end-user spreadsheet developers. The first experiment studied a new way of measuring overconfidence. It demonstrated that overconfidence really is strong among spreadsheet developers. The sec...

Despite strong evidence of widespread errors, spreadsheet developers rarely subject their spreadsheets to post-development testing to reduce errors. This may be because spreadsheet developers are overconfident in the accuracy of their spreadsheets. This conjecture is plausible because overconfidence is present in a wide variety of human cognitive domains, even among experts. This paper describe...