Publication Type
Journal Article
Version
acceptedVersion
Publication Date
3-2018
Abstract
We find evidence that the leadership of overconfident chief executive officers (CEOs) induces stakeholders to take actions that contribute to the leader's vision. By being intentionally overexposed to the idiosyncratic risk of their firms, overconfident CEOs exhibit a strong belief in their firms’ prospects. This belief attracts suppliers beyond the firm's observable expansionary corporate activities. Overconfident CEOs induce more supplier commitments including greater relationship-specific investment and longer relationship duration. Overconfident CEOs also induce stronger labor commitments as employees exhibit lower turnover rates and greater ownership of company stock in benefit plans.
Keywords
CEO overconfidence, Leadership, Customer-supplier, Employee ownerhsip
Discipline
Corporate Finance | Finance and Financial Management
Research Areas
Finance
Publication
Journal of Financial Economics
Volume
127
Issue
3
First Page
519
Last Page
545
ISSN
0304-405X
Identifier
10.1016/j.jfineco.2017.12.008
Publisher
Elsevier
Citation
PHUA, Kenny; THAM, T. Mandy; and WEI, Chi Shen.
Are overconfident CEOs better leaders? Evidence from stakeholder commitments. (2018). Journal of Financial Economics. 127, (3), 519-545.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5379
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jfineco.2017.12.008