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Are Overconfident CEOs Better Innovators?

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  • Hirshleifer, David
  • Low, Angie
  • Teoh, Siew Hong

Abstract

Using options- and press-based proxies for CEO overconfidence (Malmendier and Tate 2005a, 2005b, 2008), 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 (R&D) expenditure. Overconfident managers only achieve greater innovation than non-overconfident managers in innovative industries. Overconfidence is not associated with lower sales, ROA, or Q.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22425.

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Date of creation: 29 Apr 2010
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Handle: RePEc:pra:mprapa:22425

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

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Overconfident CEOs are better
    by Economic Logician in Economic Logic on 2010-06-16 14:00:00
  2. Weekly Wisdom Roundup # 83- The Smartest Linkfest On The Web
    by Miguel in Simoleon Sense on 2010-06-20 19:32:27
  3. [??]?????CEO??????????????
    by himaginary in himaginaryの日記 on 2012-08-02 07:00:00
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Cited by:
  1. Yusuke Kinari & Noriko Mizutani & Fumio Ohtake & Hiroko Okudaira, 2011. "Overconfidence Increases Productivity," ISER Discussion Paper 0814, Institute of Social and Economic Research, Osaka University.
  2. Francis, Bill & Hasan, Iftekhar & Park, Jong Chool & Wu, Qiang, 2014. "Gender differences in financial reporting decision-making: Evidence from accounting conservatism," Research Discussion Papers 1/2014, Bank of Finland.
  3. Andriosopoulos, Dimitris & Andriosopoulos, Kostas & Hoque, Hafiz, 2013. "Information disclosure, CEO overconfidence, and share buyback completion rates," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5486-5499.
  4. Schrand, Catherine M. & Zechman, Sarah L.C., 2012. "Executive overconfidence and the slippery slope to financial misreporting," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 311-329.
  5. repec:asi:ajoerj:2013:p:329-350 is not listed on IDEAS
  6. Loureiro, Gilberto & Makhija, Anil K. & Zhang, Dan, 2011. "Why Do Some CEOs Work for a One-Dollary Salary?," Working Paper Series 2011-7, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
  7. Campbell, T. Colin & Gallmeyer, Michael & Johnson, Shane A. & Rutherford, Jessica & Stanley, Brooke W., 2011. "CEO optimism and forced turnover," Journal of Financial Economics, Elsevier, vol. 101(3), pages 695-712, September.

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  1. Economic Logic blog

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