Are Overconfident CEOs Better Innovators?

Using options- and press-based proxies for CEO overconfidence (Malmendier and Tate 2005a, 2005b, 2008), 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 (R&D) expenditure. Overconfident managers only achieve greater innovation than non-overconfident managers in innovative industries. Overconfidence is not associated with lower sales, ROA, or Q.

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Year of publication:	2010-04-29
Authors:	Hirshleifer, David ; Low, Angie ; Teoh, Siew Hong
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	CEO Overconfidence \| Innovation \| R&D \| Patent

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs) ; G30 - Corporate Finance and Governance. General ; M40 - Accounting and Auditing. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008560965