This paper addresses two questions. First, what causes the paper-bill spread to vary over time in anticipation of income fluctuations ? Second, why has the predictive power of the spread declined in recent years? Consistent with previous empirical work, the paper provides evidence for the...

We develop a model of the effect of CEO overconfidence on dividend policy and empirically examine many of its predictions. Consistent with our main prediction, we find that the level of dividend payout is lower in firms managed by overconfident CEOs. We document that this reduction in dividends...