The effect of CEO overconfidence on stock price crash risk
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2017-07-19
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en
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This thesis examines the relationship between CEO overconfidence and stock price crash risk. First, a mechanism is developed which explains the relationship between CEO overconfidence and stock price crash risk by using CEO communication. After that the findings of Kim, Wang and Zhang (2016) are subjected to a series of robustness tests using several different measures for stock price crash risk and CEO overconfidence, a wider timespan and more control variables. There will be sixteen proxies for stock price crash risk, seven for CEO overconfidence, a sample with data between 1996 and 2016 and three additional control variables. By doing this it is found that the proxies used by Kim, Wang and Zhang (2016) are significantly related, while some of the additional measures for stock price crash risk and CEO overconfidence are not significantly related. Therefore, it is concluded that the Kim, Wang and Zhang (2016) findings are not robust. Finally, it is also found that the effect of CEO overconfidence does not depend on how common CEO overconfidence is in an industry.
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Faculteit der Managementwetenschappen