Theoretical Model on CEO Overconfidence Impact on Corporate Investments

Khalil Hatoum

The Quarterly Review of Economics and Finance, 2021, vol. 80, issue C, 545-552

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.

Keywords: Corporate investments; CEO overconfidence; Decision making process; Probabilities (search for similar items in EconPapers)
JEL-codes: G31 G41 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:80:y:2021:i:c:p:545-552

DOI: 10.1016/j.qref.2021.04.005

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