CEO Overconfidence and Overinvestment under Product Market Competition

How does product market competition influence whether CEOs with greater or lower levels of overconfidence are hired and whether CEOs overinvest in innovation? In a Cournot model in which firms hire a CEO to take charge of research and development (R&D) investment and production decisions, this paper shows that CEO overconfidence and overinvestment can be explained as an equilibrium outcome. More importantly, the intensity of product market competition and the equilibrium CEO overconfidence level (and R&D investment) exhibit an inverted U-shaped relationship. As the product market tends towards perfect competition, all firms hire a realistic CEO and do not overinvest

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Year of publication:	2015
Authors:	Yu, Chia-Feng (Jeffrey)
Publisher:	[2015]: [S.l.] : SSRN
Subject:	Führungskräfte \| Managers \| Wettbewerb \| Competition \| Investitionsentscheidung \| Investment decision \| Industrieforschung \| Industrial research \| Führungskräfteauswahl \| Executive selection \| Spieltheorie \| Game theory
Description of contents:	Abstract [papers.ssrn.com] ; Abstract [doi.org]

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Extent:	1 Online-Ressource
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: Managerial and Decision Economics, Vol. 35, 2014 Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 23, 2013 erstellt Volltext nicht verfügbar
Other identifiers:	10.2139/ssrn.2223162 [DOI]
Classification:	D86 - Economics of Contract: Theory ; G34 - Mergers; Acquisitions; Restructuring; Corporate Governance ; M41 - Accounting ; M51 - Firm Employment Decisions; Promotions (hiring, firing, turnover, part-time, temporary workers, seniority issues)
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013035922