The purpose of this study is to provide empirical evidence on the influence of managers' Overconfidence in themselves or their firm's future performance on the decision-making process for share repurchase. The findings show that, first, firms managed by highly confident managers tend to not engage in share repurchase. Second, this tendency is observed only in firms where there is a low substitutability between dividends and share repurchases. This study highlights the differences in the substitutability of dividends and share repurchases between Japan and the United States, discovering that the relationship between managerial confidence and share repurchases varies between these countries. The results suggest that the impact of a manager's psychological trait (confidence) on certain capital policies is not universally consistent, varying according to national and institutional differences. This study contributes to the accumulation of literature in this field.
