A Study on the Relationship Between Financial Crisis,Overconfidence of CEOs,and Enterprise Risk Taking
Although prior studies have shown that CEO confidence increases firm's risk-taking behaviour,few studies specifically explore whether the link between CEO overconfidence and a firm's risk-taking influenced by a financial crisis.This paper investigates the effect of CEO overconfidence on the risk-taking behaviour of companies before and after the 2008 financial crisis.We find that the effect of CEO overconfidence on the risk-taking behaviour decreases after experiencing the 2008 crisis.The results are consistent using several time-varying overconfidence measures.The results remain robust using total firm risk.This paper attempts to shed light on the state dependence of the managerial traits of executives,and also has practical implications for corporate governance such as dynamically adjusting incentives for executive mangers after financial crisis.
overconfidencerisk takingfinancial crisisidiosyncratic volatility of stock prices
万方数据
维普
