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Title: Are overconfident CEOs better innovators?
Authors: Hirshleifer, David
Low, Angie
Teoh, Siew Hong
Issue Date: 2012
Source: HIRSHLEIFER, D., LOW, A., & TEOH, S. H. (2012). Are Overconfident CEOs Better Innovators?. The Journal of Finance, 67(4), 1457-1498.
Series/Report no.: The journal of finance
Abstract: Previous empirical work on adverse consequences of CEO overconfidence raises the question of why firms hire overconfident managers. Theoretical research suggests a reason: overconfidence can benefit shareholders by increasing investment in risky projects. Using options- and press-based proxies for CEO overconfidence, 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 expenditures. However, overconfident managers achieve greater innovation only in innovative industries. Our findings suggest that overconfidence helps CEOs exploit innovative growth opportunities.
ISSN: 0022-1082
DOI: 10.1111/j.1540-6261.2012.01753.x
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:NBS Journal Articles

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