Power of an overconfident CEO and dividend payment

Abstract

The aim of the paper is to identify the relation between managerial overconfidence, managerial power and dividend decisions. We have implemented the survey to detect managerial overconfidence. We collected 145 answers with financial data covering 2010–2015. We employed the managerial share in ownership as a proxy for managerial power.We found that managerial power enhances to reveal the overconfidence in dividend decisions. We also found the pattern of behaviour of an overconfident manager having more power: more frequent dividends are paid out, but if dividend is paid out, the level and ratio of the dividend is lower.