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Director overconfidence

Author

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  • Randy Beavers
  • Shawn Mobbs

Abstract

We examine overconfident chief executive officer (CEO) directors and find they attend more board meetings, are more likely to serve on the nominating or the compensation committee, have more independent directorships, and foster higher attendance rates on boards. Boards with overconfident directors are more likely to appoint a better prepared and more reputable CEO following a turnover. These newly appointed CEOs are also more likely to be overconfident. This evidence indicates overconfident CEO directors exhibit significant influence on the board and over the firm's CEO selection.

Suggested Citation

  • Randy Beavers & Shawn Mobbs, 2020. "Director overconfidence," Financial Management, Financial Management Association International, vol. 49(2), pages 389-422, June.
    • Handle: RePEc:bla:finmgt:v:49:y:2020:i:2:p:389-422
    DOI: 10.1111/fima.12268
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    References listed on IDEAS

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    Cited by:

    1. Cook, Douglas O. & Chowdhury, Jaideep & Zhang, Weiwei, 2023. "Director optimism and CEO equity compensation," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 143-162.

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