48 Pages Posted: 13 Sep 2006 Last revised: 14 Sep 2015
Date Written: March 1, 2015
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.
Keywords: overconfidence, behavior biases, management forecasts, voluntary disclosure
JEL Classification: M41
Suggested Citation: Suggested Citation
Hribar, Paul and Yang, Holly, CEO Overconfidence and Management Forecasting (March 1, 2015). Contemporary Accounting Research, Forthcoming; Singapore Management University School of Accountancy Research Paper No. 2015-34. Available at SSRN: https://ssrn.com/abstract=929731 or http://dx.doi.org/10.2139/ssrn.929731
By Ray Ball