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Managerial optimism and corporate investment behavior

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  • Ikeda, Naoshi
  • Inoue, Kotaro
  • Sugitani, Shoji

Abstract

This study aims to analyze if managerial optimism affects corporate investment behavior. We measure managerial optimism by directly surveying CFOs and executives responsible for corporate investments of listed companies in Japan. We show that capital investment is higher when managers are optimistic. When we combine our survey data of Japanese managers with comparable cross-country data, we find that companies located in countries with highly optimistic managers invest more actively. This implies that managerial optimism not only partly explains differences of corporate behaviors in a country, but also those among countries.

Suggested Citation

  • Ikeda, Naoshi & Inoue, Kotaro & Sugitani, Shoji, 2021. "Managerial optimism and corporate investment behavior," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    • Handle: RePEc:eee:beexfi:v:30:y:2021:i:c:s2214635021000368
    DOI: 10.1016/j.jbef.2021.100492
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    References listed on IDEAS

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    Cited by:

    1. Guiyu Bai & Delin Meng, 2022. "Assessing Influence Mechanism of Management Overconfidence, Corporate Environmental Responsibility and Corporate Value: The Moderating Effect of Government Environmental Governance and Media Attention," IJERPH, MDPI, vol. 20(1), pages 1-19, December.
    2. Lim, King Yoong & Morris, Diego, 2023. "Business optimism and the innovation-profitability nexus: Introducing the COVID-19 adaptable capacity framework," Research Policy, Elsevier, vol. 52(1).

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    More about this item

    Keywords

    Management; Attitude; Optimism; Investment policy;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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