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This study examines the relationship between managerial overconfidence and corporate financing decisions by constructing proxies for managerial overconfidence based on the track records of earnings forecasts in Japanese listed firms. We find that managers have the stable tendency to forecast overly upward earnings compared to actual ones and that their upward bias decreases the probability of issuing equity in the public market by about 4.7 percent per one standard error, which economically has the strongest impact on financing decisions. This tendency is observed when we employ alternative measures for managerial overconfidence and other model specifications. However, in private placements, the choice to offer equity is not always avoided by managers. This implies that managers place private equity with the expectation of the certification effect

The 2008 Crash (the Crash) has been attributed to the dominance of financialized corporate governance, particularly an increased shareholder value rhetoric. Following the Crash, this extreme narrative is understood to have become less financialized through increasingly favouring stakeholders. The purpose of this research is to investigate this often-accepted view using field theory, wherein managers' biases in the value-creating process result from an interconnected, dynamic, multi-actor discourse.

Various domains across the UK’s corporate governance environment, from the perspective of field theory, generate the complex discourse: corporate and regulatory domains, stakeholder organizations such as the press and think tanks. Domain-specific corpora, representative of this multi-actor field, were constructed, with financialization analysed by assessing managers’ altering biases concerning the relative importance of shareholders and stakeholders (amongst other factors like time horizon) to value creation.

Highlights of the multiple findings include the following: corporate narrative about value creation became less financialized following the Crash, yet favouring shareholders, while the multi-actor discourse for the UK economy as a whole became slightly more financialized.

Analysing a multi-actor discourse is complex. And this, to the best of the author’s knowledge, is the first study of its kind, and only made possible with the original methodology of narrative staining. The approach, while having particular relevance to field theory, is applicable to many other narrative-based research scenarios.

Using Schein’s Descriptive Index (SDI), this paper aims to first examine gender role stereotypes and requisite managerial characteristics among Irish business students over a 10-year period. Then, the paper investigates whether there have been changes in gender role stereotypes during this period and subsequently unpack the reasons behind any changes recorded.

In total, 1,124 students from the same business student population rated men, women and managers in general, using SDI. Data was collected first during the academic year 2008–2009 and again in 2018–2019 to determine stability or change in gender role stereotypes and requisite managerial characteristics. Intraclass correlation coefficients scores were computed to determine the relationship between gender and requisite managerial characteristics and identify differences and similarities between the two samples. To explore the content of gender stereotypes, an examination of the specific descriptive items was conducted by performing a factorial analysis using Duncan’s Multiple Range Test. Finally, the authors adapted the scales developed by Duehr and Bono (2006) to determine whether broad gender stereotypic characteristics with respect to communal and agentic, attributed to men, women and managers, differ by sample.

The overall findings indicate changes in the extent of gender role stereotyping of the managerial role among the male cohorts studied. The subsequent analysis of the descriptive items identified that the change among the male cohort is due to the levels of agency they perceive women to now possess.

The authors contribute to the literature on both gendered and managerial stereotypes by showing changes in the pro-male stereotype of the managerial role and contribute to the existing debate on a shift towards a more androgynous view of leadership.

These findings help understand the content of gender role stereotypes that recent graduates bring with them to their first job post-graduation. The observed changes in the level of agency ascribed to women by their male counterparts could prove to be an important step forward for women’s advancement to managerial positions.

The findings indicate that both male and female cohorts in Sample 2 perceived men and women in general to possess the same levels of communal and agentic traits as their managerial counterparts.

The purpose of this paper is to empirically analyze whether and how managerial overconfidence affects stock price crash risk.

Based on a large sample of Chinese non-state-owned firms from 2000 to 2012, this study employs methods including multiple linear regression model, Heckman two-stage treatment effect procedure, firm fixed effects model and event study to clarify the causality relationship between managerial overconfidence and crash risk.

The authors find that firms with overconfident managers (chief executive officer or board chairs) are more likely to experience future stock price crashes than firms with non-overconfident managers. The effect of overconfidence on crash risk is more pronounced for firms with low transparency, suggesting that firm opacity facilitates overconfident managers’ bad news hoarding activities, which, in turn, increases stock price crash risk. The authors also show evidence that overconfident managers tend to disclose good news in a timely manner.

The authors add to the growing literature on stock price crash risk. Specifically, the authors find that the cognitive bias of board chair plays an important role in the bad news hoarding activities, thereby increasing the likelihood of stock price crash. This study also contributes to the literature that addresses the effects of managerial overconfidence on corporate finance issues.

The purpose of this paper is to examine the effects of managerial decision horizon (MDH) on real estate investment trust (REIT) behavior and performance.

In this study, the authors expand the number of proxies and measure managerial horizon by CEO age, CEO tenure, cash compensation relative to total compensation, and the amount of vested equity-based compensation to total compensation. To avoid potential measurement error, the authors compute the average ranking score of the four individual measures to determine the overall MDH of a CEO. Cross-sectional time series regressions are then performed on the effects of CEO MDH on REIT policies and performance. The authors also examine if the effect of myopic MDH can be mitigated by good corporate governance. For robustness purpose, the authors also compare the effects of age-related MDH and compensation-related MDH.

The results show that REITs managed by CEOs with short MDHs have lower levels of asset growth and a lower standard deviation of return on assets. These REITs also have lower debt levels, lower dividend payouts, and hold more cash. The results suggest that short-horizon CEOs have incentives to lower investment risk, default risk, and liquidity risk at the firm level in order to protect personal benefits. CEOs with a short horizon also have a negative impact on REIT performance. The results also show that CEO compensation-related horizon problems are mitigated by corporate governance, but CEO age-related horizon problems are significant and persistent. The results suggest that age-related behavioral biases of the CEO are important determinants of corporate decisions.

The results of this study suggest that the managerial behavioral biases should be considered in understanding firm behavior.

This is the first study that examines the effects of MDH on REIT behavior and performance. The unique regulatory environment of REITs makes them less susceptible to agency problems of free cash flow and thus provides a clearer picture of the effect of MDH. Prior studies focus on the effect of managerial horizon on firm investment activity, this study expands the scope to examine the effects on investment and financial policies. In addition, this study adds to the literature by showing that the effect of age-related horizon problems may not be mitigated by good corporate governance.

The purpose of this paper is to examine the effects of temporal myopia (focussing on the short-term) and spatial myopia (focussing on the current market) on firm strategy. Specifically the paper investigates the effects of temporal and spatial myopia on the persistence and conformity of firm strategy. Additionally, the paper tests how environmental munificence moderates these effects. A secondary purpose of this paper is to develop a replicable method of measurement of temporal and spatial myopia.

The authors conducted a manual content analysis of letters to shareholders for 100 firms over three years to measure spatial and temporal myopia. After collecting strategy variables and control variables from Compustat, the authors utilize a random-effects panel methodology.

The results indicate that strategy is influenced by both temporal and spatial myopia. Specifically, temporal myopia creates a focus on the firm's current strategy, leading to a persistent strategy over time and spatial myopia focusses firm decision makers on better known technologies and competitors, leading to conformity to industry strategic profiles. Additionally, the paper tests how environmental munificence influences these relationships. In total, the paper finds that the differing types of managerial myopia have distinct influences on firm outcomes.

This paper makes two important contributions to the literature on managerial myopia. First, the paper investigates the differential effects of both spatial and temporal myopia on firm strategy, topics that have been relatively overlooked in empirical investigations of decision making. Second, the paper develops replicable measures for both temporal and spatial myopia, which have been previously suggested to limit the ability to empirically test the implications of managerial myopia (Laverty, 1996).

The characteristic of managers’ personality is a key factor in their decision-making. One of the most important personality characteristic of managers is overconfidence. Overconfident managers have false trust about their abilities and have a positive view of the firm’s future performance. Thus, the purpose of this study is to investigate the association between managerial overconfidence and internal control weaknesses (ICW) of the firms listed on the Tehran Stock Exchange (TSE).

Sample includes the 480 firm-year observations from companies listed on the TSE during the years 2013–2017, and the hypothesis is tested using multivariate regression model based on panel data analysis.

The authors found that managerial overconfidence increases the firms’ ICW. The findings are robust to alternative measure of managerial overconfidence, individual analysis of the research hypothesis for each year and endogeneity concern. Moreover, additional analysis reveals that the positive relationship between managerial overconfidence and ICW is less pronounced in larger firms.

To the best of the authors’ knowledge, this is the first study to analyze the association between managerial overconfidence and ICW in emerging capital markets and, therefore, can contribute to extend the current literature on managerial overconfidence and ICW in developing countries, especially Iran’s emerging capital market.

The purpose of this paper is to develop a positive and functional attributional model of leadership, using both leadership perceptions and leadership effectiveness as criteria. Drawing from cognitive complexity theory, and attributional complexity theory, this article identifies attributional accuracy of managers as the fundamental component of the functional model developed here. The model of leadership developed here focuses on such key leadership constructs as leader information processing using complex schemata, leader attributions and their accuracy, leader behaviors that follow their attributions, mediating variables such as subordinate self‐efficacy, satisfaction, and motivation, and outcome variables such as leadership perceptions and subordinate performance. These variables are linked in a process model.

The article depends on a critical review of the literature to build a theoretical model consistent with theory building guidelines.

Accurate attributions and the avoidance of attributional biases are identified as key factors determining effectiveness and leadership perceptions. Leader interactive behaviors, feedback latency, and the development of strategies for improving performance are identified as key consequences of attributional accuracy.

This article has implications for the ways in which managers are selected and trained to provide leadership in organizations.

The theory developed here breaks new ground in the investigation of the positive and functional attributional processes of leaders leading to organizational or unit effectiveness. This research contributes to knowledge by pointing to the functional role of accurate attributions and the delineation of the processes through which such attributions can lead to enhancing subordinate motivation and hence leadership effectiveness.

The purpose of this paper is to investigate the impact of loan officers’ overconfidence on risk-taking decision and solvency performance measured by z-scores in the context of Islamic and conventional microfinance institutions (MFIs).

A random effect generalized least square regression was applied to examine the effect of overconfidence on credit risk-taking. The data set covers 326 conventional MFIs and 57 Islamic MFIs in six different regions over the period of 2005–2015.

Overconfidence proxies have shown through high loan growth, low-interest margin and loan loss provision reveal negative consequences on risk-exposures for both MFIs averagely. The loan officer’s overconfidence is significantly and positively related to the risk-taking decision, and thus, a lower loan portfolio quality. Besides, loan officers’ risk-taking behaviour harms these institutions’ solvency performance.

This paper makes an initial attempt to evaluate the effect of overconfidence behavioural bias on risk-taking decisions and its implication on the MFIs solvency and sustainability.

The purpose of this paper is to investigate the impact of audit quality and ownership structure on the degrees of accuracy and bias in earnings forecasts issued in initial public offering (IPO) prospectuses in a frontier market, Bangladesh.

The paper uses both univariate and multivariate tests on the sample of 75 IPOs. The paper employs the tests to see the association between the degree of forecast bias and three corporate governance variables.

The results reveal that the magnitude of earnings forecast bias is significantly explained by issuer, auditor reputation, proportions of capital raised from domestic as well as foreign investors, and whether the IPO firm is a start-up venture. Underwriter prestige, length of the issuing firms' operating history, leverage, whether the firm went public during a stock market boom, and forecast horizon do not appear to be statistically significant in explaining the degree of forecast bias.

Although auditor reputation and the proportion of equity retained by pre-IPO owners have been investigated in several studies on IPO forecast accuracy and/or bias, no study has attributed them to corporate governance as a whole by combining auditor reputation, and ownership categories held by small private investors and foreign portfolio investors.