Overconfidence and Early-Life Experiences: The Impact of Managerial Traits on Corporate Financial Policies

  title={Overconfidence and Early-Life Experiences: The Impact of Managerial Traits on Corporate Financial Policies},
  author={Ulrike M. Malmendier and G. Tate and J. Yan},
  journal={Corporate Finance: Capital Structure & Payout Policies eJournal},
  • Ulrike M. Malmendier, G. Tate, J. Yan
  • Published 2010
  • Economics, Business
  • Corporate Finance: Capital Structure & Payout Policies eJournal
  • We show that measurable managerial characteristics have significant explanatory power for corporate financing decisions beyond traditional capital-structure determinants. First, managers who believe that their firm is undervalued view external financing as overpriced, especially equity. Such overconfident managers use less external finance and, conditional on accessing risky capital, issue less equity than their peers. Second, CEOs with Depression experience are averse to debt and lean… CONTINUE READING
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