Corpus ID: 27549660

CEO Overconfidence, Corporate Governance, and the Demand for Directors and Officers Insurance

  title={CEO Overconfidence, Corporate Governance, and the Demand for Directors and Officers Insurance},
  author={Jeffrey Bolesa and Yevgeniy Davydovb and Jacqueline Volkman-Wisec},
Previous work shows directors’ and officers’ (D&O) liability coverage provides insight into a firm’s risk-taking and governance. We develop a theoretical model to show how CEO overconfidence impacts D&O insurance decisions. We find firms with overconfident CEOs have a lower demand for D&O insurance. Using an options-based measure for CEO overconfidence, we test this model and find that firms with overconfident CEOs have a lower demand for D&O insurance. This effect holds when controlling for… Expand

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