Restraining Overconfident CEOs Through Credit Ratings
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| Název: | Restraining Overconfident CEOs Through Credit Ratings |
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| Autoři: | Khoo, Shee‐Yee, Verousis, Thanos, Vu, Huong, Klusak, Patrycja |
| Informace o vydavateli: | Wiley //doi.org/10.1111/eufm.12557 |
| Rok vydání: | 2025 |
| Sbírka: | Apollo - University of Cambridge Repository |
| Témata: | 3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour |
| Popis: | Publication status: Published ; Funder: The authors received no specific funding for this work. ; ABSTRACT Overconfident CEOs significantly reduce their acquisition activity when facing a higher risk of a credit rating downgrade, possibly because credit ratings impact their ability to access external financing. Investment‐grade firms managed by overconfident CEOs that are placed on a negative rating outlook reduce their acquisitiveness by approximately 16 percentage points. Our findings offer a novel perspective on the role of credit rating agencies as an external control mechanism, constraining overconfident managers from pursuing value‐destroying acquisitions. Our findings survive a battery of robustness checks, including endogeneity, controlling for internal control mechanisms and market reaction tests. |
| Druh dokumentu: | article in journal/newspaper |
| Popis souboru: | application/pdf; text/xml |
| Jazyk: | English |
| Relation: | eufm12557; https://www.repository.cam.ac.uk/handle/1810/384011 |
| Dostupnost: | https://www.repository.cam.ac.uk/handle/1810/384011 |
| Přístupové číslo: | edsbas.A376428 |
| Databáze: | BASE |
Nájsť tento článok vo Web of Science | Abstrakt: | Publication status: Published ; Funder: The authors received no specific funding for this work. ; ABSTRACT Overconfident CEOs significantly reduce their acquisition activity when facing a higher risk of a credit rating downgrade, possibly because credit ratings impact their ability to access external financing. Investment‐grade firms managed by overconfident CEOs that are placed on a negative rating outlook reduce their acquisitiveness by approximately 16 percentage points. Our findings offer a novel perspective on the role of credit rating agencies as an external control mechanism, constraining overconfident managers from pursuing value‐destroying acquisitions. Our findings survive a battery of robustness checks, including endogeneity, controlling for internal control mechanisms and market reaction tests. |
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