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Managerial Overoptimism and Discretionary Disclosure

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  • Nikolaj Niebuhr Lambertsen
  • Matthias Lassak

Abstract

We examine the effect of managerial overoptimism on discretionary disclosure of subjective information, such as earnings forecasts. The market applies a discount upon disclosure to capture the possibility that the revealed subjective expectation is too optimistic. While this discount is correct on average, it is too high (low) for a truly objective (overoptimistic) manager. Consequently, overoptimistic managers disclose more frequently, and their firms are overvalued. We show that higher levels of overoptimism or a greater fraction of overoptimistic managers amplify the market discount, which ultimately reduces overall disclosure in equilibrium.

Suggested Citation

  • Nikolaj Niebuhr Lambertsen & Matthias Lassak, 2026. "Managerial Overoptimism and Discretionary Disclosure," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 53(4), pages 1337-1356, August.
    • Handle: RePEc:bla:jbfnac:v:53:y:2026:i:4:p:1337-1356
    DOI: 10.1111/jbfa.70059
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