We find that labor market frictions affect a firm’s choice of growth strategy. Using the passage of the good faith exception as an exogenous shock to the cost of dismissing employees, firms significantly increase their strategic alliance activities, replacing internal investments and...

Previous empirical work on adverse consequences of CEO overconfidence raises the question of why firms would hire overconfident managers. Theoretical research suggests a reason, that overconfidence can sometimes benefit shareholders by increasing investment in risky projects. Using options- and...

This is the set of presentation slides for the paper "Are Overconfident CEOs Better Innovators?"Previous empirical work on adverse consequences of CEO overconfidence raises the question of why firms hire overconfident managers. Theoretical research suggests a reason: overconfidence can benefit...

Using options- and press-based proxies for CEO overconfidence (Malmendier and Tate 2005a, 2005b, 2008), we find that over the 1993-2003 period, firms with overconfident CEOs have greater return volatility, invest more in innovation, obtain more patents and patent citations, and achieve greater...