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  5. Behavioral CEOs: The Role of Managerial Overconfidence

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Behavioral CEOs: The Role of Managerial Overconfidence

  • Ulrike Malmendier
  • Geoffrey Tate
Journal of Economic Perspectives
vol. 29, no. 4, Fall 2015
(pp. 37–60)
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Abstract

In this paper, we provide a theoretical and empirical framework that allows us to synthesize and assess the burgeoning literature on CEO overconfidence. We also provide novel empirical evidence that overconfidence matters for corporate investment decisions in a framework that explicitly addresses the endogeneity of firms' financing constraints.

Citation

Malmendier, Ulrike, and Geoffrey Tate. 2015. "Behavioral CEOs: The Role of Managerial Overconfidence." Journal of Economic Perspectives, 29 (4): 37–60. DOI: 10.1257/jep.29.4.37

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • D25 Intertemporal Firm Choice, Investment, Capacity, and Financing
  • G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
  • G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
  • M10 Business Administration: General
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