CEO Overconfidence and the Value of Corporate Cash Holdings

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

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Year of publication:	2018
Authors:	Aktas, Nihat
Other Persons:	Louca, Christodoulos (contributor) ; Petmezas, Dimitris (contributor)
Publisher:	[2018]: [S.l.] : SSRN
Subject:	Cash-Management \| Cash management \| Führungskräfte \| Managers \| Betriebliche Liquidität \| Corporate liquidity \| Schätzung \| Estimation \| Unternehmenswert \| Firm value

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Extent:	1 Online-Ressource (56 p)
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: Journal of Corporate Finance, Forthcoming Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 12, 2018 erstellt
Other identifiers:	10.2139/ssrn.2692324 [DOI]
Classification:	G14 - Information and Market Efficiency; Event Studies ; G30 - Corporate Finance and Governance. General ; G32 - Financing Policy; Capital and Ownership Structure
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012936741