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CEO Confidence and Stock Returns

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  • Roger Best

    () (University of Central Missouri)

Abstract

In this research, I explore whether announcements of CEO confidence contain new information for investors. Information asymmetry implies that insiders such as Chief Executive Officers should have better information regarding the firm prospects than the average stock market participant. Thus, announcements of CEO perceptions may provide valuable insights to investors. Utilizing The Conference Board quarterly measures of CEO confidence and CEO six-month economic outlook, I find significant correlations between changes in CEO outlook and the announcement date returns on three major stock market indexes. These correlations are larger and more significant for indexes of smaller companies, implying announcements of CEO confidence provide unique and valuable information to stock markets.

Suggested Citation

  • Roger Best, 2008. "CEO Confidence and Stock Returns," Working Papers 0808, University of Central Missouri, Department of Economics & Finance, revised Aug 2008.
  • Handle: RePEc:umn:wpaper:0808
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    File URL: http://faculty.ucmo.edu/econfinpapers/wpaper/wp0808.pdf
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    References listed on IDEAS

    as
    1. Jansen, W. Jos & Nahuis, Niek J., 2003. "The stock market and consumer confidence: European evidence," Economics Letters, Elsevier, vol. 79(1), pages 89-98, April.
    2. O. David Gulley & Jahangir Sultan, 1998. "Consumer confidence announcements: do they matter?," Applied Financial Economics, Taylor & Francis Journals, vol. 8(2), pages 155-166.
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    Keywords

    CEO Confidence; Consumer Confidence; Stock Returns; Asymmetric Information;

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