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Overconfidence, Corporate Governance, and Global CEO Turnover

Advances in Financial Economics

ISBN: 978-1-78350-120-5

Publication date: 9 December 2013



To determine what role overconfidence plays in the forced removal of CEOs internationally.


The study makes use of the Fortune Global 500 list.


We find that overconfident CEOs face significantly greater hazards of forced turnovers than their non-overconfident peers. Regardless of important differences in culture, law, and corporate governance across countries, overconfidence has a separate and distinct effect on CEO turnover. Overconfident CEOs appear to be at greater risk of dismissal regardless of where in the world they are located. We also discover that overconfident CEOs are disproportionately succeeded by other overconfident CEOs, regardless of whether they are forcibly removed or voluntarily leave office. Finally, we determine that the dismissal of overconfident CEOs is associated with improved market performance, but only limited enhancement in accounting returns.


This study is unique with its examination of overconfidence among global CEOs rather than being limited to U.S. chief executives. It also provides insight into how overconfidence is related to national cultures, legal systems and corporate governance mechanisms.



Choi, H.-S., Ferris, S.P., Jayaraman, N. and Sabherwal, S. (2013), "Overconfidence, Corporate Governance, and Global CEO Turnover", Advances in Financial Economics (Advances in Financial Economics, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 101-138.



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