• Login
    View Item 
    •   Home
    • Brock Theses
    • Masters Theses
    • M.Sc. Mathematics and Statistics
    • View Item
    •   Home
    • Brock Theses
    • Masters Theses
    • M.Sc. Mathematics and Statistics
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Browse

    All of BrockUCommunitiesPublication DateAuthorsTitlesSubjectsThis CollectionPublication DateAuthorsTitlesSubjectsProfilesView

    My Account

    LoginRegister

    Statistics

    Display statistics

    CEO Overconfidence and the Probability of Bankruptcy

    • CSV
    • RefMan
    • EndNote
    • BibTex
    • RefWorks
    Thumbnail
    Name:
    Brock_Amin_Ruhul_2021.pdf
    Size:
    635.0Kb
    Format:
    PDF
    Description:
    Thesis work
    Download
    Author
    Amin, Ruhul
    Keyword
    Overconfidence, Probability of bankruptcy, Altman Z-Score, Overinvestment, CEO dominance
    
    Metadata
    Show full item record
    URI
    http://hdl.handle.net/10464/15644
    Abstract
    This thesis examines the relation between CEO overconfidence and the probability of bankruptcy. In addition to the main research question, we develop two additional hypotheses. We evaluate the potential link or channel between CEO overconfidence and the probability of bankruptcy. In the relationship between CEO overconfidence and the probability of bankruptcy, we seek for any interaction effects of CEO dominance. It is not uncommon for CEOs to be overconfident about their firms' prospects. In our sample, we use data from the year 2000 to 2019 for US companies. We proxy the bankruptcy probability using Altman’s Z Score. We use a stock option-driven measure of overconfidence, and this measure assumes that non-overconfident CEO will exercise their stock options if it is in the money, while overconfident CEOs will hold stock options beyond a rational threshold. We construct both continuous and indicator-based measures of overconfidence to test the hypotheses. The empirical findings reveal that CEO overconfidence increases the probability of bankruptcy. We do not find any evidence in favor of overinvestment which we consider as a channel through which overconfidence leads to increased bankruptcy risk. We also find that dominant and overconfident CEOs are suited for innovative firms, implying that giving an overconfident CEO a dominant position can minimize a firm's probability of bankruptcy. The implications of this study are that firms should be cautious in hiring overconfident CEO and they should take measures to reduce the negative effects of CEO overconfidence like the probability of bankruptcy. One way to reduce the probability of bankruptcy in innovative firms is to appoint overconfident CEO into a dominant position.
    Collections
    M.Sc. Mathematics and Statistics

    entitlement

     
    DSpace software (copyright © 2002 - 2023)  DuraSpace
    Quick Guide | Contact Us
    Open Repository is a service operated by 
    Atmire NV
     

    Export search results

    The export option will allow you to export the current search results of the entered query to a file. Different formats are available for download. To export the items, click on the button corresponding with the preferred download format.

    By default, clicking on the export buttons will result in a download of the allowed maximum amount of items.

    To select a subset of the search results, click "Selective Export" button and make a selection of the items you want to export. The amount of items that can be exported at once is similarly restricted as the full export.

    After making a selection, click one of the export format buttons. The amount of items that will be exported is indicated in the bubble next to export format.