Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 30, 2022 erstellt
Beschreibung:
Harnessing CEO overconfidence whilst exploiting their risk appetite and over-optimism has long been of interest to management scholars and firms. We find that overconfident CEOs’ reluctance to access external financing indicates that they reduce their acquisition activity at high rating levels, where the risk from a downgrade and subsequently the unobstructed access to internal financing is at its highest. We explore the mechanism via which credit ratings reduce the acquisitiveness of overconfident CEOs. When faced with downgrade risk, overconfident CEOs refocus their acquisition activities to a more conservative investment strategy that does not jeopardise their access to debt financing. Collectively, our results demonstrate that credit ratings have positive unintended consequences for the firm in the form of enhancing CEO monitoring and refocusing acquisition strategies