Work

Managerial Overconfidence and Dividend Stickiness

Year: 2023

Type: article

Abstract: In this study, we examine whether overconfident CEOs strive to smooth dividends. Our findings show overconfident CEOs increase dividends more as earnings increase and decrease dividends less as earnings decline, resulting in downward dividend stickiness. This asymmetric dividend payout is consistent with the selective self-attribution bias. Furthermore, the effect of managerial overconfidence on dividend stickiness is more pronounced for firms without catering incentives. In addition, overconfident CEOs do not manage share repurchases as they do for dividends. Therefore, we do not find a positive effect of managerial overconfidence on total payout stickiness.

Source: Journal of Accounting Auditing & Finance

DOI: 10.1177/0148558x221150102

Authors: Jui-Chia Lin, Min-Teh Yu

Institutions: National Yang Ming Chiao Tung University, Providence University

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

Funders: Ministry of Science and Technology, Taiwan, National Science and Technology Council

OpenAlex ID: W4321103282

FWCI: 1.772

Cites: 49

Cited by: 10

Related to: 10