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Conservative traits and managerial forecasting style

Author

Listed:
  • Sara Bormann

    (Goethe-University Frankfurt)

  • Debbie Claassen

    (BMW Group)

  • Christian Hofmann

    (LMU Munich)

  • Nina Schwaiger

    (LMU Munich)

Abstract

We investigate whether conservatism as a personality trait, measured by managers’ signatures, influences managers’ forecasting style. Building on upper echelons theory and psychology literature, we predict that conservative personality traits such as the resistance to change and the ensuing cautiousness in updating beliefs influence managers’ forecasts. Our findings suggest that conservative CFOs more likely select earnings as compared to revenues as the main KPI of the forecast, keep the same KPI across years, and issue specific forecasts. Finally, we provide some evidence that conservative CFOs issue more accurate forecasts.

Suggested Citation

  • Sara Bormann & Debbie Claassen & Christian Hofmann & Nina Schwaiger, 2020. "Conservative traits and managerial forecasting style," Journal of Business Economics, Springer, vol. 90(3), pages 335-368, April.
    • Handle: RePEc:spr:jbecon:v:90:y:2020:i:3:d:10.1007_s11573-019-00957-y
    DOI: 10.1007/s11573-019-00957-y
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    References listed on IDEAS

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    Cited by:

    1. Persakis, Antonios & Iatridis, George Emmanuel, 2023. "How economic uncertainty influences the performance of investor perceptions and behavior," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).

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    More about this item

    Keywords

    Management forecasts; Conservatism; Upper echelons theory; Personality traits;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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