CEO overconfidence, lottery preference and the cross-section of stock returns

Jing Lu, Keng Yu Ho, Po Hsin Ho, Kuan Cheng Ko

Research output: Contribution to journalArticlepeer-review


Unlike existing studies that mostly focus on investors’ biased behavior in explaining the lottery-related anomaly, our study highlights the importance of CEO overconfidence for the anomaly. We propose that CEO overconfidence could enhance investors’ confidence in the stock's price even if the stock exhibits lottery-like payoffs. As a result, lottery stocks with overconfident CEOs are less prone to subsequent underperformance. Based on portfolio-based analyses and cross-sectional regressions, we provide robust evidence to confirm this hypothesis. Our study has important implications to the literature on both lottery-related anomaly and CEO overconfidence.

Original languageEnglish
Article number103749
JournalFinance Research Letters
StatePublished - Jun 2023


  • CEO overconfidence
  • Lottery preference
  • Maximum daily returns
  • Stock returns


Dive into the research topics of 'CEO overconfidence, lottery preference and the cross-section of stock returns'. Together they form a unique fingerprint.

Cite this