<scp>CEO</scp> Overconfidence and Management Forecasting

2015/05/06 by Paul Hribar, Holly Yang · 2 citations
Economics, Econometrics and Finance · Business, Management and Accounting · #Financial Markets and Investment Strategies #Auditing, Earnings Management, Governance #Corporate Finance and Governance

paper · doi:10.1111/1911-3846.12144

Abstract

Abstract This paper examines how overconfidence affects the properties of management forecasts. Using both the “over‐optimism” and “miscalibration” dimensions of overconfidence to generate our predictions, we examine three research questions. First, we examine whether overconfidence increases the likelihood of issuing a forecast. Second, we examine whether overconfidence increases the amount of optimism in management forecasts. Third, we examine whether overconfidence increases the precision of the forecast. Using both options‐ and press‐based measures to proxy for individual overconfidence, we find support for all three research questions.

Citations

• Corporate Disclosure Policy and Analyst Behavior.
• The Hubris Hypothesis of Corporate Takeovers
• Overconfidence and Excess Entry: An Experimental Approach
• Investor Psychology and Security Market Under‐ and Overreactions
• Internal control and management guidance
• Sample Selection Bias as a Specification Error
• On the Association between Voluntary Disclosure and Earnings Management

Cited by

• Behavioral Economics of Accounting: A Review of Archival Research on Individual Decision Makers*
• Employee Perceptions of Corporate Culture and Management Forecast Accuracy: Evidence from Glassdoor and ChatGPT

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