Impact of the characteristics of CEO's overconfidence on the determination of incentive compensation

Abstract

The aim of this article is to examine the impact of the characteristics of overconfident CEO's on determining incentive compensation. The sample consists of 100 US non-financial companies in the S&P 500. The model estimation results, during the period from 2000 to 2010, showed that overconfident executives have a significant negative impact on his incentive compensation. Furthermore, the results of multiple linear regression showed that experienced, and older CEO has a significant and positive impact on the level of incentive compensation.