Corporate Financial Policies with Overconfident Managers

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Managerial Traits and Capital Structure Decisions (2008, unknown): “…beliefs, an (over-) optimistic manager exhibits an upward bias 6For example, recent empirical studies by Ben-David, Graham, and Harvey (2006) and Malmendier, Tate, and Yan (2006) provide strong support for the view that overconfident and optimistic managers bias corporate financial…”
Managerial Overconfidence and Corporate Policies (2007, unknown): “They show that biased managers exhibit high investment-cash flow sensitivity (Malmendier and Tate 2005a), engage intensively in unsuccessful mergers and acquisitions (Malmendier and Tate 2006), and avoid tapping the capital markets (Malmendier, Tate, and Yan 2006). Using Malmendier and Tate’s news-b”
Trade-Off and Pecking Order Theories of Debt (2007, background): “Malmendier et al. (2005) report that, as an empirical matter, overconfident CEOs are more likely than other CEOs to raise debt (rather than equity) to cover financing deficit.”