Effects of managerial overconfidence on analyst recommendations

Effects of managerial overconfidence on analyst recommendations 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 meclin@mail.ntpu.edu.tw Po-Hsin Ho Phho@mail.ntpu.edu.tw Hsiang-Lin Chih hlchih@mail.ntpu.edu.tw Department of Business Administration, National Taipei University, 151, University Rd., San Shia District, New Taipei City 23741, http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Effects of managerial overconfidence on analyst recommendations

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Publisher
Springer US
Copyright
Copyright © 2018 by Springer Science+Business Media, LLC, part of Springer Nature
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operations Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-018-0743-4
Publisher site
See Article on Publisher Site

Abstract

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 meclin@mail.ntpu.edu.tw Po-Hsin Ho Phho@mail.ntpu.edu.tw Hsiang-Lin Chih hlchih@mail.ntpu.edu.tw Department of Business Administration, National Taipei University, 151, University Rd., San Shia District, New Taipei City 23741,

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Jun 5, 2018

References

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