Managerial Overconfidence and Share Repurchases

Pei Gi Shu*, Yin-Hua Yeh, Tsui Lin Chiang, Jui Yi Hung

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

Following prior studies, we use keywords in press portrayals to gauge managerial overconfidence. We hypothesize that managerial overconfidence is related to a manager's perception that the firm is undervalued. Results from 2744 share repurchase programs launched by 783 listed firms in Taiwan confirm this hypothesis. We find that managerial overconfidence is positively correlated with the intensity of share repurchasing, which is measured by scale, execution, frequency, and the difference between the announced price and post-execution price. Moreover, the programs launched by overconfident managers were not undervalued and therefore were associated with reduced post-announcement returns.

Original languageEnglish
Pages (from-to)39-65
Number of pages27
JournalInternational Review of Finance
Volume13
Issue number1
DOIs
StatePublished - 1 Mar 2013

Fingerprint Dive into the research topics of 'Managerial Overconfidence and Share Repurchases'. Together they form a unique fingerprint.

Cite this