DIJB (Diponegoro International Journal of Business)
Vol 1, No 2 (2018)

Does managerial bias pose destructive impact on company? A non-linear relationship between CEO’s overconfidence and company value

Bayu Wiratama (Management Department, Faculty of Economics, Universitas Negeri Semarang)
Kris Brantas Abiprayu (Management Department, Faculty of Economics, Universitas Negeri Semarang)
Siti Ridloah (Management Department, Faculty of Economics, Universitas Negeri Semarang)

Article Info

Publish Date
30 Dec 2018

Abstract

This research aims at testing the influence of CEO’s Overconfidence (KDB) on the values of companies registered with the Indonesian Stock Exchange in the period 2007-2015. KDB is a bias inherent in individual, particularly corporate CEO resulted from his/her great authority. A CEO with KDB will assume that his/her company has investment opportunities in the future and, thus, reduce dividend in anticipation of acquiring an investment opportunity in the future. Some opinions argue that KDB’s benefit will be maximal when the confidence is at moderate level. A manager is deemed able to contribute to his/her company, have a good innovation level, have optimal motivation level, and present lower level of cost of debt or capital and optimal amount and rate of investment return. Too low or too high KDB is deemed only to pose negative impact on company value as resulted from non-optimal degree of leverage and investment.

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Journal Info
DIJB (Diponegoro International Journal of Business)
Website

Abbrev

ijb

Publisher

Universitas Diponegoro

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

Description

Diponegoro International Journal of Business (DIJB) is a biannually peer-reviewed journal issued by Department of Management, Faculty of Economics and Business, Universitas Diponegoro. DIJB aims to be the media for publishing empirical issues related to business studies. DIJB invites manuscripts in ...