Managerial overconfidence and dividend policy in emerging markets: Evidence from Türkiye

Dividend decisions are not solely shaped by firm fundamentals; they are also influenced by managers’ behavioral tendencies when making strategic financial choices. Among these tendencies, managerial overconfidence—defined as the overestimation of one’s abilities while downplaying risks—has been increasingly recognized as an important determinant of corporate financial policies. This study examines how managerial overconfidence affects dividend payments by analyzing 108 non-financial firms listed on Borsa Istanbul from 2014 to 2024. Managerial overconfidence was initially evaluated using seven binary indicators reflecting investment behavior, leverage choices, profitability patterns, and dividend practices; however, only the OCI6 (high asset growth combined with no dividend payments) indicator yielded statistically meaningful results. The empirical analysis shows that OCI6, which captures high-growth firms that do not distribute dividends, has a significant negative effect on the likelihood of paying dividends. This finding suggests that overconfident managers may prioritize growth-oriented strategies over shareholder payouts, thereby influencing dividend outcomes independent of firm-level financial conditions. By providing evidence from an emerging market, this study extends the behavioral approach to dividend policy and highlights the importance of managerial traits in financial decision-making. The results offer relevant implications for investors and policymakers concerned with how managerial behavior shapes corporate payout strategies.