Pilot CEOs and Management Earnings Forecasts

Abstract

This study examines the association between pilot CEOs and management earnings forecasts. We find that firms with pilot CEOs are associated with a lower likelihood of issuing voluntary earnings forecasts, suggesting that pilot CEOs are less likely to release private information through earnings forecast. We further investigate the association between pilot CEOs and management forecast characteristics such as forecast accuracy, bias, and precision. Our empirical results reveal that firms with a pilot CEO offer more accurate and more conservative forecasts than firms with a non-pilot CEO. This evidence is consistent with our argument that pilot CEOs establish superior situation awareness talents and develop conservative predicting attitudes from their flying experience. Overall, our study sheds light on how CEO’s off-the-job experience affects management earnings forecast behavior.