Do managerial traits matter in corporate lobbying? Evidence from overconfident CEOs
Journal
Journal of Banking & Finance
Type
journal article
Date Issued
2026-07
Author(s)
Abstract
Do overconfident chief executive officers (CEOs) misjudge the political risks faced by their firms and, as a result, reduce their engagement in corporate lobbying? We examine this question by comparing the lobbying activities of firms led by overconfident CEOs with those led by nonoverconfident peers. Using a sample of 1369 U.S. firms from 2002 to 2023, we find that overconfident CEOs invest significantly less in corporate lobbying than nonoverconfident CEOs. This finding is robust across a wide range of alternative measures and model specifications. Our identification strategy exploits exogenous CEO turnover events and matched-sample regressions. Cross-sectional analyses further indicate that overconfident CEOs do not view lobbying as a risk-reducing response to political uncertainty. Overall, the results are consistent with CEO overconfidence bias: overconfident CEOs place excessive reliance on their own abilities and underutilize lobbying as a safeguard against political risk.
Language
English (United States)
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier
Volume
188
Number
107704
Subject(s)
Division(s)