G. Hilary, Charles Hsu, Benjamin Segal, Rencheng Wang
{"title":"The Bright Side of Managerial Over-Optimism","authors":"G. Hilary, Charles Hsu, Benjamin Segal, Rencheng Wang","doi":"10.2139/ssrn.2286226","DOIUrl":"https://doi.org/10.2139/ssrn.2286226","url":null,"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.","PeriodicalId":157371,"journal":{"name":"CGN: CEOs (Sub-Topic)","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123290183","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Self Attribution Bias of the CEO: Evidence from CEO Interviews on CNBC","authors":"Y. H. Kim","doi":"10.2139/ssrn.2213119","DOIUrl":"https://doi.org/10.2139/ssrn.2213119","url":null,"abstract":"Self attribution bias (SAB, hereafter) is a mechanism that engenders overconfidence by attributing good performance to one’s ability and bad performance to bad luck or the environment (Gervais and Odean, 2001). Using the transcripts of CEO interviews on CNBC, we measure the SAB of the CEO. Consistent with the prediction by Gervais et al. (2011) and Goel and Thakor (2008), we find concave non-linear relation between SAB and the market response to acquisition announcements. We also find that the CEOs with SAB are more likely to be fired and more sensitively to performance, especially under stronger governance regime of Sarbanes Oxley Act (SOX). Our results are robust after controlling for the selection bias to be in the CNBC interview. We consider and rule out alternative explanations, such as journalists’ impact on governance and CEO’s narcissism.","PeriodicalId":157371,"journal":{"name":"CGN: CEOs (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-02-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130600420","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Zhonglan Dai, Ĺ. Markóczy, S. Radhakrishnan, Weining Zhang
{"title":"Are Young and Female CEOs More Forthcoming with Earnings Forecasts?","authors":"Zhonglan Dai, Ĺ. Markóczy, S. Radhakrishnan, Weining Zhang","doi":"10.2139/ssrn.2210121","DOIUrl":"https://doi.org/10.2139/ssrn.2210121","url":null,"abstract":"We investigate the effect of the career concerns of young CEOs and of female CEOs on their willingness to issue voluntary earnings forecasts. We argue that the labor market’s perception about a young CEO’s uncertain talent leads to a stronger desire to establish a good reputation by issuing more voluntary earnings forecasts, particularly when the news is positive. We also argue that the negative, stereotype-based expectations against female CEOs create a stronger challenge, which leads female CEOs to issue more earnings forecasts regardless whether the news is positive or negative. Finally, we predict that high compensation reduces young CEOs’ and female CEOs’ incentives to issue earnings forecast. Using 46,596 firm-quarter management earnings forecasts from 1996 to 2010, we find empirical support for all our hypotheses.","PeriodicalId":157371,"journal":{"name":"CGN: CEOs (Sub-Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124358614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Are Busy Directors Good for Business","authors":"R. Heaney, Lary Li, M. Tan","doi":"10.2139/SSRN.2025890","DOIUrl":"https://doi.org/10.2139/SSRN.2025890","url":null,"abstract":"This paper draws on the top 100 firms in Australia, sampled every three years from 1990 through to 2008, to analyse the impact of busy directors on large Australian companies. Information on directors, CEO and Chairperson along with shareholder information is hand collected from the annual reports of largest 100 companies. We focus on director and CEO outside engagements using a count of outsider directorships, outside CEO positions, outside chairperson positions and industry/professional memberships rather than just focusing on a count of outside directorships. Using fixed effects panel data analysis we find that firm performance is decreasing in size and leverage over the study period. Board busyness is found to be increasing in firm size and leverage and decreasing in CEO tenure relative to chairperson tenure. CEO busyness is found to be increasing in size, chair busyness and CEO tenure relative to chair tenure and decreasing in CEO duality and CEO tenure relative to chairperson tenure. An important contribution to the literature is the finding of variation in the results for outside engagements in private firms compared with outside engagements in public firms. We also note important differences in the determinants of CEO busyness relative to the determinants of board busyness.","PeriodicalId":157371,"journal":{"name":"CGN: CEOs (Sub-Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127493688","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"On the Optimal Allocation of Power between Shareholders and Managers","authors":"Nina Walton","doi":"10.2139/ssrn.1654165","DOIUrl":"https://doi.org/10.2139/ssrn.1654165","url":null,"abstract":"This paper formally investigates the optimal allocation of power for shareholders recognizing that they may be heterogeneous, and that agency problems exist with managers. In the model I treat shareholders as economic actors who choose decision rules (or the degree of shareholder power) under a veil of ignorance with the goal of maximizing their utility. Managers choose their consumption of private benefits based on the power allocation chosen by shareholders. I demonstrate that heterogeneous shareholders face a trade-off in deciding on the allocation of shareholder power. In the event they are in favor of an investment, shareholders would like to minimize their ability to veto a project. In the event they are against an investment, shareholders would like to maximize their veto power. The optimal voting rule balances these two considerations. Unhappy shareholders who can easily sell their shares do not face this trade-off, in which case they will grant more power to managers. I also demonstrate that in all circumstances shareholders will allocate more power to themselves as a way of controlling managerial agency costs.","PeriodicalId":157371,"journal":{"name":"CGN: CEOs (Sub-Topic)","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122427916","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Morten Bennedsen, F. Pérez-Gónzalez, Daniel Wolfenzon
{"title":"Do Ceos Matter?","authors":"Morten Bennedsen, F. Pérez-Gónzalez, Daniel Wolfenzon","doi":"10.2139/ssrn.970575","DOIUrl":"https://doi.org/10.2139/ssrn.970575","url":null,"abstract":"Estimating the value of top managerial talent is a central topic of research that has attracted widespread attention from academics and practitioners. Yet, studying the impact of managers on firm performance is difficult because of endogeneity and omitted variables concerns. In this paper, we test for the impact of managers on firm performance in two ways. First, we examine whether top executive deaths have an impact on firm performance, focusing on the manager and firm characteristics that are associated to large manager-death effects. Second, we test for the interaction between the personal and professional activities of managers by examining the effect of deaths of immediate family members (spouses, parents, children, etc) on firm performance. Our main findings are three. First, CEO deaths are strongly correlated with declines in firms operating profitability, asset growth and sales growth. Second, the death of board members does not seem to affect firm prospects, indicating that not all senior managers are equally important for firms' outcomes. Third, CEOs' immediate family deaths are significantly negatively correlated to firm performance. This last result suggests a strong link between the personal and business roles that top management plays, a connection that is present even in large firms. Overall, our findings demonstrate CEOs are extremely important for firms' prospects.","PeriodicalId":157371,"journal":{"name":"CGN: CEOs (Sub-Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2006-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122223771","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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