Overconfidence, CEO Awards, and Corporate Tax Aggressiveness

Theory and prior research suggest that overconfidence leads managers to overestimate their own ability to generate returns, leading to riskier corporate policies. We use a novel dataset of media awards as an exogenous shock to overconfidence to test whether award-winning CEOs adopt more aggressive corporate tax policies. Using propensity score matching and a difference-in-difference design, we find strong evidence that firms with an award-winning CEO exhibit significantly greater tax aggressiveness following the award. Overall, our results suggest that CEO overconfidence has a meaningful impact on corporate tax policy.