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Article: Are founder CEOs more overconfident than professional CEOs? Evidence from S&P 1500 companies

TitleAre founder CEOs more overconfident than professional CEOs? Evidence from S&P 1500 companies
Authors
Keywordsfounder CEOs
corporate governance
professional CEOs
overconfidence
Issue Date2017
Citation
Strategic Management Journal, 2017, v. 38, n. 3, p. 751-769 How to Cite?
AbstractResearch summary: We provide evidence that founder chief executive officers (CEOs) of large S&P 1500 companies are more overconfident than their nonfounder counterparts (“professional CEOs”). We measure overconfidence via tone of CEO tweets, tone of CEO statements during earnings conference calls, management earnings forecasts, and CEO option-exercise behavior. Compared with professional CEOs, founder CEOs use more optimistic language on Twitter and during earnings conference calls. In addition, founder CEOs are more likely to issue earnings forecasts that are too high; they are also more likely to perceive their firms to be undervalued, as implied by their option-exercise behavior. We provide evidence that, to date, investors appear unaware of this “overconfidence bias” among founders. Managerial summary: This article helps to explain why firms managed by founder chief executive officers (CEOs) behave differently from those managed by professional CEOs. We study a sample of S&P 1500 firms and find strong evidence that founder CEOs are more overconfident than professional CEOs. To date, investors appear unaware of this overconfidence bias among founders. Our study should help firm stakeholders, including investors, employees, suppliers, and customers, put the statements and actions of founder CEOs in perspective. Our study should also help members of corporate boards make more informed decisions about whether to retain (or bring back) founder CEOs or hire professional CEOs. Copyright © 2016 John Wiley & Sons, Ltd.
Persistent Identifierhttp://hdl.handle.net/10722/267591
ISSN
2020 Impact Factor: 8.641
2020 SCImago Journal Rankings: 11.035
SSRN
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorLee, JM-
dc.contributor.authorHwang, BH-
dc.contributor.authorChen, H-
dc.date.accessioned2019-02-22T04:08:27Z-
dc.date.available2019-02-22T04:08:27Z-
dc.date.issued2017-
dc.identifier.citationStrategic Management Journal, 2017, v. 38, n. 3, p. 751-769-
dc.identifier.issn0143-2095-
dc.identifier.urihttp://hdl.handle.net/10722/267591-
dc.description.abstractResearch summary: We provide evidence that founder chief executive officers (CEOs) of large S&P 1500 companies are more overconfident than their nonfounder counterparts (“professional CEOs”). We measure overconfidence via tone of CEO tweets, tone of CEO statements during earnings conference calls, management earnings forecasts, and CEO option-exercise behavior. Compared with professional CEOs, founder CEOs use more optimistic language on Twitter and during earnings conference calls. In addition, founder CEOs are more likely to issue earnings forecasts that are too high; they are also more likely to perceive their firms to be undervalued, as implied by their option-exercise behavior. We provide evidence that, to date, investors appear unaware of this “overconfidence bias” among founders. Managerial summary: This article helps to explain why firms managed by founder chief executive officers (CEOs) behave differently from those managed by professional CEOs. We study a sample of S&P 1500 firms and find strong evidence that founder CEOs are more overconfident than professional CEOs. To date, investors appear unaware of this overconfidence bias among founders. Our study should help firm stakeholders, including investors, employees, suppliers, and customers, put the statements and actions of founder CEOs in perspective. Our study should also help members of corporate boards make more informed decisions about whether to retain (or bring back) founder CEOs or hire professional CEOs. Copyright © 2016 John Wiley & Sons, Ltd.-
dc.languageeng-
dc.relation.ispartofStrategic Management Journal-
dc.subjectfounder CEOs-
dc.subjectcorporate governance-
dc.subjectprofessional CEOs-
dc.subjectoverconfidence-
dc.titleAre founder CEOs more overconfident than professional CEOs? Evidence from S&P 1500 companies-
dc.typeArticle-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1002/smj.2519-
dc.identifier.scopuseid_2-s2.0-85011840299-
dc.identifier.volume38-
dc.identifier.issue3-
dc.identifier.spage751-
dc.identifier.epage769-
dc.identifier.eissn1097-0266-
dc.identifier.isiWOS:000397155100015-
dc.identifier.ssrn2510549-
dc.identifier.issnl0143-2095-

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