CEO Overconfidence , Corporate Governance , and the Demand for Directors and Officers Insurance ∗
@inproceedings{Bolesa2014CEOO, title={CEO Overconfidence , Corporate Governance , and the Demand for Directors and Officers Insurance ∗}, author={Jeffrey Bolesa and Yevgeniy Davydovb and Jacqueline Volkman-Wisec}, year={2014} }
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… CONTINUE READING
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