This thesis examines the effect of CEO overconfidence on the choice of turnaround initiatives. Using a sample of distressed firms in S&P 1500 from 2002 to 2013, the results show that overconfident CEOs are less likely to implement extensive operating initiatives in response to declining performance; i.e., they are less likely to employ ‘threat-rigidity’ responses. We also find that there is no significant difference of preference between short-term and long-term strategic turnaround initiatives for overconfident CEOs.