CEO Overconfidence and Management Forecasting
University of Iowa - Henry B. Tippie College of Business
Singapore Management University - School of Accountancy
March 1, 2015
Contemporary Accounting Research, Forthcoming
Singapore Management University School of Accountancy Research Paper No. 2015-34
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.
Number of Pages in PDF File: 48
Keywords: overconfidence, behavior biases, management forecasts, voluntary disclosure
JEL Classification: M41
Date posted: September 13, 2006 ; Last revised: September 14, 2015
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