Enter the Research Conversation with Yufei Wang
Do analysts recognize CEO overconfidence, and how long does it take for analysts to learn about CEO overconfidence?
When a CEO is replaced by one who exhibits different characteristics, this transition can create surprises in the market; such changes add to the uncertainty of analysts’ forecasting environment, increasing the difficulty of making accurate forecasts. Overconfidence is one of the management traits that is frequently identified in managers and executives of firms.
Overconfident CEOs tend to be overoptimistic about their self-evaluation: believing that they have greater control over uncertain events, overestimating their performance and underestimating risks. Prior literature has documented that compared to non-overconfident CEOs, overconfident CEOs behave differently in management and decision-making, leading to different decisions and altered performance in many aspects of firm-level operations. My research aims to investigate whether analysts recognize CEO overconfidence and how long it takes for analysts to learn of the CEO’s overconfidence.
This research offers implications on the importance of understanding the CEO’s characteristics and the impact on financial information users, such as analysts.
Area of Research
The impact of CEO overconfidence and analysts’ forecasts
Nanchang, Jiangxi, China
I like traveling and taking pictures.