Do Overconfident Managers Influence External Financing Choice in Pakistan: An Empirical Analysis

This study examines the relationship between managerial overconfidence and corporate financing decisions by employing the survey technique including questionnaire and interviews. This study found that there is significant positive relationship between managerial overconfidence and external financing choice. The results of the study suggest that overconfident managers would prefer external financing. From this study, we argue that managerial overconfidence can account for corporate financing distortions. This study also proposed that factors used in traditional framework are also important factors and these factors also suggest behavioral effect of management in the context of corporate governance.