The Effects of CEOs’ Overconfidence and Education on Cash Holding: A Study of Non-Financial Companies in Indonesia during 2019

  • Hafizha Shabrina
  • Arief Wibisono Lubis


According to the Upper Echelons Theory, cash holding policy is influenced by CEO's psychological and cognitive orientations. These CEO’s psychological and cognitive orientations can be proxied through CEO’s overconfidence bias and education. This study examines the effects of CEO’s overconfidence, field of study, and education level on cash holding and the roles of CEO’s field of study and education level as moderating variables in the relationship between overconfidence and cash holding. The sample consists of 384 non-financial listed companies in Indonesia Stock Exchange during 2019. This study uses Industry-Adjusted Investment Rate (IAIR) to measure CEO’s overconfidence and multiple linear regression to estimate the relationship among the variables. The findings show that CEO’s overconfidence influences cash holding in non-financial listed companies in Indonesia Stock Exchange during 2019. The results are robust after adding control variables from previous studies, namely company size, operating cash flow, capital expenditure, NWC, leverage, dividend, and industry risk. These findings support the Upper Echelons Theory by providing empirical evidence of the influence of CEO’s psychological orientation based on overconfidence bias on corporate cash holding.


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How to Cite
SHABRINA, Hafizha; LUBIS, Arief Wibisono. The Effects of CEOs’ Overconfidence and Education on Cash Holding: A Study of Non-Financial Companies in Indonesia during 2019. International Journal of Advanced Research in Economics and Finance, [S.l.], v. 3, n. 3, p. 89-101, sep. 2021. ISSN 2682-812X. Available at: <>. Date accessed: 20 may 2024.
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