MALMENDIER, ULRIKE; TATE, GEOFFREY - In: Journal of Finance 60 (2005) 6, pp. 2661-2700
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...