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dc.contributor.authorAmin, Ruhul
dc.date.accessioned2022-03-04T18:59:02Z
dc.date.available2022-03-04T18:59:02Z
dc.identifier.urihttp://hdl.handle.net/10464/15644
dc.description.abstractThis 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.en_US
dc.language.isoengen_US
dc.publisherBrock Universityen_US
dc.subjectOverconfidence, Probability of bankruptcy, Altman Z-Score, Overinvestment, CEO dominanceen_US
dc.titleCEO Overconfidence and the Probability of Bankruptcyen_US
dc.typeElectronic Thesis or Dissertationen
dc.degree.nameM.Sc. Managementen_US
dc.degree.levelMastersen_US
dc.contributor.departmentFaculty of Business Programsen_US
dc.degree.disciplineFaculty of Businessen_US
refterms.dateFOA2022-03-04T18:59:03Z


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