Effects of managerial overconfidence on analyst recommendations

Mei Chen Lin; Po Hsin Ho; Hsiang Lin Chih

doi:10.1007/s11156-018-0743-4

Effects of managerial overconfidence on analyst recommendations

Mei Chen Lin, Po Hsin Ho, Hsiang Lin Chih

Department of Finance

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

This study investigates the relation between managerial overconfidence and analyst recommendations. The empirical finding shows that analysts are less likely to issue upgrade recommendations for firms managed by overconfident CEOs. Similarly, analysts spend a longer time to upgrade stocks associated with overconfident CEOs. The effect of CEO overconfidence on recommendation revisions is non-monotonic. Analysts are more reluctant to upgrade firms with highly-overconfident CEOs. More experienced analysts are less susceptible to managerial overconfidence. Moreover, investors exhibit stronger response to recommendations for firms with overconfident CEOs.

Original language	English
Pages (from-to)	73-99
Number of pages	27
Journal	Review of Quantitative Finance and Accounting
Volume	53
Issue number	1
DOIs	https://doi.org/10.1007/s11156-018-0743-4
State	Published - 15 Jul 2019

Keywords

Analyst experience
Analyst recommendation
Managerial overconfidence

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Effects of managerial overconfidence on analyst recommendations

Abstract

Keywords

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