Abstract

https://ssrn.com/abstract=1496404
 
 

References (42)



 
 

Citations (8)



 


 



CEO Overconfidence and Dividend Policy


Sanjay Deshmukh


DePaul University - Department of Finance

Anand M. Goel


Navigant Consulting, Inc.

Keith M. Howe


DePaul University - Department of Finance

February 18, 2010


Abstract:     
We develop a model of the effect of CEO overconfidence on dividend policy and empirically examine its central predictions. Consistent with our main prediction, we find that the level of dividend payout is lower in firms managed by overconfident CEOs. We document that this reduction in dividends associated with CEO overconfidence is greater in firms with lower growth opportunities and lower cash flow. We also show that the magnitude of the positive market reaction to a dividend-increase announcement is lower for firms managed by overconfident CEOs. Our overall results are consistent with the predictions of our model.

Number of Pages in PDF File: 55

Keywords: CEO, Overconfidence, Dividends, Payout

JEL Classification: G350, D810


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Date posted: October 29, 2009 ; Last revised: March 16, 2010

Suggested Citation

Deshmukh, Sanjay and Goel, Anand M. and Howe, Keith M., CEO Overconfidence and Dividend Policy (February 18, 2010). Available at SSRN: https://ssrn.com/abstract=1496404 or http://dx.doi.org/10.2139/ssrn.1496404

Contact Information

Sanjay Deshmukh
DePaul University - Department of Finance ( email )
1 East Jackson Blvd.
Chicago, IL 60604-2287
United States
312-362-8472 (Phone)
312-362-6566 (Fax)
Anand Mohan Goel
Navigant Consulting, Inc. ( email )
30 South Wacker Drive
Chicago, IL 60606
United States
HOME PAGE: http://www.anandgoel.org/
Keith M. Howe (Contact Author)
DePaul University - Department of Finance ( email )
1 East Jackson Blvd.
Chicago, IL 60604-2287
United States
312-362-5126 (Phone)
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