Literature Review Women on boards and in TMTS and firm performance 91 prior positive firm performance and a high CEO s pay relative to other executives pay Hayward Hambrick 1997 Another factor considered is the moment of exercise of options with the firm s sha res as underlying held by the CEO These options are often part of the CEO s pay package The CEO will be characterized as overconfident if he or she exercises his or her not tradeable options lately because he expects a further increase of the share price Malmendier Tate 2005 The narrowness of earnings forecasts may also indicate CEO over confidence point estimates are more likely to be given than range estimates e g Ben David et al 2012 4 3 Background The German Renewable Energies Sector a state funded boom A detailed description of the German renew able energies sector s development is of vital im portance for the present case study The German state stipulated demand for renewable energies particularly for photovoltaics and created a new strongly growing market for related products and services Companies active in this sector benefi ted enormously for several years not so much because of exceptional performance of their ma nagement but simply because of the state funded boom However top management teams of these companies may have claimed the full credit for the strong results during the boom years Claiming successes as one s personal accomplishment faci litates the emergence of overconfidence Gervais Odean 2001 The German government had started promoting the expansion of renewable energies in Germany in 1990 by passing the law on the sale of elec tricity from renewable energy sources to the grid Stromeinspeisungsgesetz or Electricity Feeding Act 10 Renewable energies at that time compri sed the sources water power wind power solar insulation biomass landfill gas mine gas and gas from purification plants The large utilities in Ger many had often refused or heavily hampered the feed in of electricity generated from renewable energy sources by mainly small producers except hydro electric power The law now obliged utili ties to grant access to the grid to operators of re newable energy plants with a maximum capacity of five megawatts peak MWp and guaranteed a minimum remuneration for the electricity fed in linked to average electricity prices The utilities were allowed to pass these costs on to consumers via the electricity bill Initially operators of wind power plants were the main beneficiaries as the guaranteed compensation roughly covered pro duction costs By contrast costs for electricity from solar technology primarily photovoltaics were many times higher in these early days Originally designed as a wide range test to assess the current state of the art for grid connected PV plants with small capacities and the need for further development Hoffmann 2008 the for mer Ministry for Research and Technology intro duced the joint federal and state government 1 000 roofs program in September 1990 The costly installation of a grid connected PV plant was encouraged by the government through subsidies of up to 70 percent While costs for generating electricity with a PV plant still amounted to 90 ct kilowatthour KWh back in 1991 compensation for each KWh as defined by the Electricity Feeding Act was only 8 5 ct KWh At these prices investors were far away from operating their photovoltaics plant on a break even basis not to mention yiel ding any positive return In order to achieve an economic benefit in addition to the indisputable environmental value many plant owners used the generated electricity for their own domestic pur 10 The Federal Ministry of Economic Affairs and Energy provides detailed information on legislation in this field on its information portal http www erneuerbare energien de The development of the market for renewable energies in Germany over time is descri bed e g in Federal Ministry of Economic Affairs and Energy 2016 CEO optimism and overconfidence

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 91
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