Overconfidence, CEO Selection, and Corporate Governance

• 成果类型: Article
• 署名作者: Goel, Anand M.; Thakor, Anjan V.
• 署名单位: Washington University (WUSTL)
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2008.01412.x
• 发表日期: 2008
• 页码: 2737-2784
• 关键词: investor psychology; career concerns; MARKET; RISK; insurance; ECONOMICS; optimism

摘要

We develop a model that shows that an overconfident manager, who sometimes makes value-destroying investments, has a higher likelihood than a rational manager of being deliberately promoted to CEO under value-maximizing corporate governance. Moreover, a risk-averse CEO's overconfidence enhances firm value up to a point, but the effect is nonmonotonic and differs from that of lower risk aversion. Overconfident CEOs also underinvest in information production. The board fires both excessively diffident and excessively overconfident CEOs. Finally, Sarbanes-Oxley is predicted to improve the precision of information provided to investors, but to reduce project investment.