Journal of Banking & Finance Vol. 188 2026
Do managerial traits matter in corporate lobbying? Evidence from overconfident CEOs
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.
- DOI
- 10.1016/j.jbankfin.2026.107704
- Volume
- 188
- Pages
- 107704
- Language
- en
- Sources
- semanticscholar openalex crossref