Conglomerate Investment, Skewness, and the CEO Long Shot Bias
Zusammenfassung
Do behavioral biases of executives matter for corporate investment decisions? Using segment-level capital allocation in multisegment firms (“conglomerates”) as a laboratory, we show that capital expenditure is increasing in the expected skewness of segment returns. Conglomerates invest more in high-skewness segments than matched stand-alone firms, and trade at a discount, which indicates overinvestment that is detrimental to shareholder wealth. Using geographical variation in gambling norms, we find that the skewness-investment relation is particularly pronounced when CEOs are likely to find long shots attractive. Our findings suggest that CEOs allocate capital with a long-shot bias.
Schlüsselwörter
Behavioral Corporate Finance; Skewness; Investment
Zitieren als
Schneider, C., & Spalt, O. (2016). Conglomerate Investment, Skewness, and the CEO Long Shot Bias. Journal of Finance, 71(2), 635–672.Details
Publikationstyp
Forschungsartikel (Zeitschrift)
Begutachtet
Ja
Publikationsstatus
Veröffentlicht
Jahr
2016
Fachzeitschrift
Journal of Finance
Band
71
Ausgabe
2
Erste Seite
635
Letzte Seite
672
Sprache
Englisch
ISSN
0022-1082
DOI
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