The bright side of managerial over-optimism
Publication Type
Journal Article
Publication Date
8-2016
Abstract
Human estimation and inference are subject to systematic biases such as overconfidence and over-optimism. In contrast to prior research that has identified multiple negative consequences of these biases, we focus on positive effects. We empirically examine a setting in which over-optimism a) is a related but different bias from overconfidence, b) emerges dynamically in a rational economic framework, and c) generates higher managerial effort. Importantly, this additional effort improves firm profitability and market value.
Keywords
Over-optimism, Managerial effort, Firm performance
Discipline
Accounting
Research Areas
Corporate Governance, Auditing and Risk Management
Publication
Journal of Accounting and Economics
Volume
62
Issue
1
First Page
46
Last Page
64
ISSN
0165-4101
Identifier
10.1016/j.jacceco.2016.04.001
Publisher
Elsevier: 24 months
Citation
HILARY, Gilles; HSU, Charles; SEGAL, Benjamin; and WANG, Rencheng.
The bright side of managerial over-optimism. (2016). Journal of Accounting and Economics. 62, (1), 46-64.
Available at: https://ink.library.smu.edu.sg/soa_research/1816
Additional URL
https://doi.org/10.1016/j.jacceco.2016.04.001