Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/70594 
Year of Publication: 
2009
Series/Report no.: 
Working Paper No. 2009-06
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
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 associated with CEO overconfidence is greater in firms with lower growth opportunities, lower cash flow, and greater information asymmetry. We also show that the magnitude of the positive market reaction to a dividend-increase announcement is lower for firms managed by overconfident CEOs. Our overall results are consistent with the predictions of our model.
Document Type: 
Working Paper

Files in This Item:
File
Size
425.55 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.