Rev Quant Finan Acc https://doi.org/10.1007/s11156-018-0743-4 ORIGINAL RESEARCH Effects of managerial overconﬁdence on analyst recommendations 1 1 2 • • Mei-Chen Lin Po-Hsin Ho Hsiang-Lin Chih Springer Science+Business Media, LLC, part of Springer Nature 2018 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. Keywords Analyst recommendation Managerial overconﬁdence Analyst experience JEL Classiﬁcation G10 G11 G40 1 Introduction Security analysts guide investor behavior by collecting, processing, interpreting and dis- seminating information about corporate ﬁnances, strategic decisions and industry trends, and by rendering summary judgments about the ﬁrms that they follow them (Hayward and & Mei-Chen Lin email@example.com Po-Hsin Ho Phho@mail.ntpu.edu.tw Hsiang-Lin Chih firstname.lastname@example.org Department of Business Administration, National Taipei University, 151, University Rd., San Shia District, New Taipei City 23741,
Review of Quantitative Finance and Accounting – Springer Journals
Published: Jun 5, 2018
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