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CEO Overconfidence, Loan-Loss Provisions, and the Effect of Country Corruption: An International Investigation
- Authors
- Lee, Hansol; Choi, Dongjoon; Lee, Ho-Young; Yoon, Inkyung
- Issue Date
- May-2023
- Publisher
- ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
- Keywords
- Loan-loss provisions; CEO overconfidence; corruption; international investigation; CEO characteristics
- Citation
- EMERGING MARKETS FINANCE AND TRADE, v.59, no.6, pp 1835 - 1851
- Pages
- 17
- Journal Title
- EMERGING MARKETS FINANCE AND TRADE
- Volume
- 59
- Number
- 6
- Start Page
- 1835
- End Page
- 1851
- ISSN
- 1540-496X
1558-0938
- Abstract
- This study examines the relationship between CEO overconfidence and bank recognition of loan-loss provisions (LLPs) and the effect of country corruption level on this relationship by analyzing cross-country data. We use a sample of 3,047 financial institutions in 53 different countries over 2013-2018. The results reveal that overconfident CEOs are more likely to recognize lower LLPs, suggesting that they overestimate (underestimate) favorable (unfavorable) outcomes of loan collection. Furthermore, we find that lower country-level corruption attenuates this relationship. We further show that overconfident CEOs reduce only the recognition of discretionary components of LLPs.
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Related Researcher
- Yoon, Inkyung
- Business Administration (Divison of Business Administration)