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Wiley InterScience | ||||||
  European Financial ManagementVolume 11 Issue 5, Pages 649 - 659 Published Online: 8 Nov 2005 © 2010 Blackwell Publishing Ltd Published in conjunction with the European Financial Management Association
Abstract | References | Full Text: PDF (Size: 115K) | Related Articles | Citation Tracking  Does Overconfidence Affect Corporate Investment? CEO Overconfidence Measures Revisited Copyright Blackwell Publishers Ltd, 2005 KEYWORDS
behavioural corporate finance
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CEO overconfidence
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corporate investment
KEYWORDS
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D80 Abstract
This article presents the growing research area of Behavioural Corporate Finance in the context of one specific example: distortions in corporate investment due to CEO overconfidence. We first review the relevant psychology and experimental evidence on overconfidence. We then summarise the results of Malmendier and Tate (2005a) on the impact of overconfidence on corporate investment. We present supplementary evidence on the relationship between CEOs' press portrayals and overconfident investment decisions. This alternative approach to measuring overconfidence, developed in Malmendier and Tate (2005b), relies on the perception of outsiders rather than the CEO's own actions. The robustness of the results across such diverse proxies jointly corroborates previous findings and suggests new avenues to measuring executive overconfidence. Received: 28 February 2002; Accepted: 09 September 2002; | 
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