Overconfident CEOs over-estimate their ability to
generate returns. Thus, on the margin, they undertake
mergers that destroy value. They also perceive outside
finance to be over-priced. We classify CEOs as
overconfident when, despite their under-diversification,
they hold options on company stock until expiration. We
find that these CEOs are more acquisitive on average,
particularly via diversifying deals. pdf-file. 2003
