The Impact of CEO Overconfidence on Dividend Policy: Evidence from Egypt

Taha, Manar Magdy; Hegazy, Ibrahim Raslan; Arafa, Eman Mamdouh

doi:10.21608/ajccr.2024.226108.1076

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	The Impact of CEO Overconfidence on Dividend Policy: Evidence from Egypt
Article 1, Volume 4, Issue 3, September 2024, Page 1-23 PDF (447.16 K)
Document Type: Original Article
DOI: 10.21608/ajccr.2024.226108.1076
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Authors
Manar Magdy Taha ; Ibrahim Raslan Hegazy; Eman Mamdouh Arafa
Faculty of Commerce, Cairo University, Giza, Egypt.
Abstract
This research investigates the impact of CEO overconfidence on dividend policy. CEO overconfidence is a behavioral bias that leads managers to overestimate their own abilities and the prospects of their projects. The analysis examines its impact on dividend policy through two main dimensions: the decision to distribute cash dividends and the level of dividend payouts. Furthermore, the study is based on the panel data of Egyptian firms over the period 2017-2021. The results reveal that the level of dividend payout is lower in firms managed by overconfident CEOs, as reflected in the negative association between CEO overconfidence index and dividend yield. Additionally, further insights have been provided into the different dimensions of CEO overconfidence and its influence on dividend payouts, demonstrating the indirect impact of CEO overconfidence on the decision to distribute cash dividends. Through highlighting the role of managerial beliefs in shaping dividend decisions, this research contributes to the literature on dividend policy.
Keywords
CEO characteristics; Overconfidence; Dividend Policy; Upper Echelons
Main Subjects
Financial Accounting


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