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Do managerial traits matter in corporate lobbying? Evidence from overconfident CEOs

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  • Lin, Shirina Hsin En
  • Rahman, Dewan
  • Sirén, Charlotta
  • Oliver, Barry

Abstract

Do overconfident chief executive officers (CEOs) misjudge the political risks faced by their firms and, as a result, reduce their engagement in corporate lobbying? We examine this question by comparing the lobbying activities of firms led by overconfident CEOs with those led by nonoverconfident peers. Using a sample of 1369 U.S. firms from 2002 to 2023, we find that overconfident CEOs invest significantly less in corporate lobbying than nonoverconfident CEOs. This finding is robust across a wide range of alternative measures and model specifications. Our identification strategy exploits exogenous CEO turnover events and matched-sample regressions. Cross-sectional analyses further indicate that overconfident CEOs do not view lobbying as a risk-reducing response to political uncertainty. Overall, the results are consistent with CEO overconfidence bias: overconfident CEOs place excessive reliance on their own abilities and underutilize lobbying as a safeguard against political risk.

Suggested Citation

  • Lin, Shirina Hsin En & Rahman, Dewan & Sirén, Charlotta & Oliver, Barry, 2026. "Do managerial traits matter in corporate lobbying? Evidence from overconfident CEOs," Journal of Banking & Finance, Elsevier, vol. 188(C).
    • Handle: RePEc:eee:jbfina:v:188:y:2026:i:c:s0378426626000786
    DOI: 10.1016/j.jbankfin.2026.107704
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