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| Type | Bachelor's Thesis |
| Scope | Discipline-based scholarship |
| Title | Management overconfidence as a determinant of capital structure |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 35 |
| Date | 2016 |
| Abstract Text | The underlying argumentation of the presented thesis is that management overconfidence leads significantely to a higher leverage, which increases the cost of financial distress. In order to get a well-diversified sample of non-financial Swiss companies the Swiss Performance Index (SPI) is being taken. The time period covers 7 years, from 30.12.2008 till 30.12.215. The overconfidence hypothesis is tested by using a random effect panel data model on the stock purchasing behaviour of insiders measured by the net buyer approach. Insiders are classified as overconfident, if the percentage change in their own company stock ownership is positive and exceeds the sample average in that given year. We can conclude that overconfidence has statistically significant effects under certain circumstances on the leverage. However, the results show that the relationship between the proposed overconfidence measurement and leverage applied on the non-financial SPI members is vague. This study further provideds evidence of firm specific factors and a macro-economic factor. There have been no statistically significant effect of industry group's on the leverage. The proposed bachelor thesis aims at combining findings made in behavioural finance and traditional corporate finance. |
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