Publication Type
Journal Article
Version
submittedVersion
Publication Date
12-2018
Abstract
Overconfident CEOs/senior executives tend to have excessively positive views of their own skills and their company’s future performance. We hypothesize that overconfident managers are more likely to engage in reckless or intentional actions/disclosures that give rise to securities class actions (SCAs). Empirical evidence is supportive: Overconfident CEOs/senior executives increase SCA likelihood, though litigation risk is ameliorated through improved governance, such as following the Sarbanes–Oxley Act of 2002. Post-SCA, companies are less likely to hire an overconfident CEO. Following an SCA, overconfident CEOs appear to moderate behavior and to reduce their litigation risk.
Keywords
CEO Overconfidence, Team Overconfidence, Securities Class Actions, Governance
Discipline
Finance | Finance and Financial Management
Research Areas
Finance
Publication
Journal of Financial and Quantitative Analysis
Volume
53
Issue
6
First Page
2685
Last Page
2719
ISSN
0022-1090
Identifier
10.1017/S0022109018001291
Publisher
Cambridge University Press (CUP): HSS Journals
Citation
BANERJEE, Suman; HUMPHERY-JENNER, Mark; NANDA, Vikram; and THAM, T. Mandy.
Executive overconfidence and securities class actions. (2018). Journal of Financial and Quantitative Analysis. 53, (6), 2685-2719.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5979
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/10.1017/S0022109018001291