Are Overconfident CEOs Better Innovators? (Presentation Slides)

31 Pages Posted: 15 Jun 2018

See all articles by David A. Hirshleifer

David A. Hirshleifer

University of California, Irvine - Paul Merage School of Business; NBER

Angie Low

Nanyang Technological University - Division of Banking & Finance

Siew Hong Teoh

University of California, Irvine - Accounting Area

Date Written: June 5, 2018

Abstract

This is the set of presentation slides for the paper "Are Overconfident CEOs Better Innovators?"

Previous empirical work on adverse consequences of CEO overconfidence raises the question of why firms hire overconfident managers. Theoretical research suggests a reason: overconfidence can benefit shareholders by increasing investment in risky projects. Using options- and press-based proxies for CEO overconfidence, we find that over the 1993–2003 period, firms with overconfident CEOs have greater return volatility, invest more in innovation, obtain more patents and patent citations, and achieve greater innovative success for given research and development expenditures. However, overconfident managers achieve greater innovation only in innovative industries. Our findings suggest that overconfidence helps CEOs exploit innovative growth opportunities.

Link to original paper https://ssrn.com/abstract=1598021.

Keywords: CEO Overconfidence, Innovation, R&D, Patent

JEL Classification: M41

Suggested Citation

Hirshleifer, David A. and Low, Angie and Teoh, Siew Hong, Are Overconfident CEOs Better Innovators? (Presentation Slides) (June 5, 2018). Journal of Finance (2012). Available at SSRN: https://ssrn.com/abstract=3190958

David A. Hirshleifer

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697-3125
United States

HOME PAGE: http://sites.uci.edu/dhirshle/

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Angie Low (Contact Author)

Nanyang Technological University - Division of Banking & Finance ( email )

Singapore, 639798
Singapore

Siew Hong Teoh

University of California, Irvine - Accounting Area ( email )

Irvine, CA 92697-3125
United States

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