Does Managerial Overconfidence Affect the Timing of SEOs?

43 Pages Posted: 8 Jul 2015

Date Written: July 7, 2015


I analyze how managerial overconfidence affects management’s propensity to issue seasoned equity offerings (SEOs). I focus separately on Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs), and further differentiate between Shelf offerings and Non-Shelf offerings. The main results suggest that overconfident managers are generally no less likely to perform an SEO than their moderately confident peers; however, they are less likely to time their SEOs alongside increased stock returns. Additionally, I find that SEO announcements made by overconfident managers are immediately followed by positive cumulative abnormal returns, and that these positive returns remain for the following two quarters after the offer. Ultimately, the results suggest that managerial overconfidence may diminish SEO market timing.

Keywords: overconfidence, confidence, behavioral, market efficiency, CEO, CFO, market reaction, timing

JEL Classification: G10, G14, M10, M12, M13

Suggested Citation

Handy, Jonathan F., Does Managerial Overconfidence Affect the Timing of SEOs? (July 7, 2015). Available at SSRN: or

Jonathan F. Handy (Contact Author)

Furman University ( email )

3300 Poinsett Hwy
Greenville, SC South Carolina 29607
United States
8642943139 (Phone)

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