CEO Overconfidence and the Speed of Adjustment of Cash Holdings
Working Paper Author/Authors
Abstract
In this study, we examine the links between CEO overconfidence, the speed of adjustment (SOA) of cash holdings, and firm value for listed US firms, finding a positive effect of CEO overconfidence on SOA. We address endogeneity concerns using a difference-in-differences approach, propensity score matching, and entropy balancing. Our results are robust to the use of alternative estimation methods. Finally, we conclude that financial constraints, leverage, and corporate governance quality affect the relation between CEO overconfidence and the SOA of cash holdings.
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© Izidin El Kalak, Marc Goergen, Yilmaz Guney, 2020
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