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“Theoretical Model on CEO Overconfidence Impact on Corporate Investments”

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  • Hatoum, Khalil

Abstract

This theoretical model estimates the impact of CEO overconfidence on corporate investment decision making process. The model helps us understand how CEO overconfidence impacts corporate investments by quantifying the expected losses and opportunity losses in corporate investments due to CEO overconfidence. This aims to raise organizational awareness about the destructive effects of this bias and ultimately to incentivize organizations to address the personalities of CEO overconfidence. Literature in this area of research supports the existence of destructive effects on corporate investments due to CEO overconfidence.

Suggested Citation

  • Hatoum, Khalil, 2021. "“Theoretical Model on CEO Overconfidence Impact on Corporate Investments”," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 545-552.
    • Handle: RePEc:eee:quaeco:v:80:y:2021:i:c:p:545-552
    DOI: 10.1016/j.qref.2021.04.005
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    References listed on IDEAS

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    Cited by:

    1. Gurdgiev, Constantin & Ni, Qiuxin, 2023. "Board diversity: Moderating effects of CEO overconfidence on firm financing decisions," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    2. Hatoum, Khalil & Moussu, Christophe & Gillet, Roland, 2022. "CEO overconfidence: Towards a new measure," International Review of Financial Analysis, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Corporate investments; CEO overconfidence; Decision making process; Probabilities;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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