A Study on the Relation among Managerial Overconfidence Overinvestment and Dividend Payout

Abstract

This study investigates empirically the relationship among the managerial overconfidence the inefficiency investment dividend policy and free cash flow and also tests how the managerial overconfidence affects the inefficient investment expenditure in Taiwan Overconfident CEOs tend to believe their ability to bring good profit to the company This trait makes them refer to the investment projects with negative net present value as valuable Therefore the firms with overconfident CEOs are more likely to own higher investment expenditure than the peers High free cash flow will cause managers to invest more inefficiently The managerial overconfidence will play an interactive role in investment distortion and dividend payout Using a large number of samples of publicly listed firms in Taiwan for the period from 1999 to 2019 our empirical evidence shows that overconfidence will affect the relationship between investment distortion and dividend payout

Date of Award	2020
Original language	English
Supervisor	Meng-Feng Yen (Supervisor)