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Are overconfident CEOs better able to transform innovation into firm value?—Evidence from the United States

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  • Mike Eom
  • Mookwon Jung
  • Jung Chul Park

Abstract

We use innovation premium (IP), proposed by Forbes, as a proxy for firm innovation to present evidence that firm value is positively associated with IP. The positive impact of the IP on firm value is amplified by overconfident CEOs, particularly in the high‐tech and biotech industries with a high proportion of intellectual capital and intangible assets. In a series of tests, we confirm that the results hold after controlling for endogeneity. our findings are consistent with the notion that the beneficial effect of corporate innovations generated by overconfident CEOs exists primarily in industries where innovations are in critical demand.

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  • Mike Eom & Mookwon Jung & Jung Chul Park, 2023. "Are overconfident CEOs better able to transform innovation into firm value?—Evidence from the United States," International Finance, Wiley Blackwell, vol. 26(2), pages 241-258, August.
    • Handle: RePEc:bla:intfin:v:26:y:2023:i:2:p:241-258
    DOI: 10.1111/infi.12433
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