The effect of CEO overconfidence on corporate disclosures amid a pervasive shock: evidence from the COVID‐19 pandemic
The effect of CEO overconfidence on corporate disclosures amid a pervasive shock: evidence from the COVID‐19 pandemic
We investigate how CEO overconfidence affect firms’ voluntary reporting of COVID-19 exposure using text-based measures of firm-level COVID-19 pandemic exposure reports. Our analysis of 3038 firm-quarter earnings conference calls in 2020 reveals that overconfident CEOs express a less pessimistic tone, compared to non-overconfident CEOs when discussing their firms’ exposure to the pandemic, and these results hold under various robustness checks. Additionally, a more pronounced negative pandemic exposure sentiment predicts weaker subsequent operating performance among non-overconfident and overconfident CEOs alike. While increased negative sentiment leads to worse stock performance among firms with non-overconfident CEOs, this predictive power is significantly weakened for overconfident CEOs. Our findings provide insights into how CEO overconfidence can affect firms’ disclosure behavior during a crisis and contribute to the literature on CEO overconfidence and pandemic-related disclosures.
CEO overconfidence, COVID-19 pandemic, corporate disclosure
1431-1462
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b
Susnjara, Jurica
c2d0b40b-0df0-4a7b-a9a6-0872a631d5c9
4 June 2025
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b
Susnjara, Jurica
c2d0b40b-0df0-4a7b-a9a6-0872a631d5c9
Jory, Surendranath, Ngo, Thanh and Susnjara, Jurica
(2025)
The effect of CEO overconfidence on corporate disclosures amid a pervasive shock: evidence from the COVID‐19 pandemic.
Journal of Business Finance & Accounting, 52 (3), .
(doi:10.1111/jbfa.12849).
Abstract
We investigate how CEO overconfidence affect firms’ voluntary reporting of COVID-19 exposure using text-based measures of firm-level COVID-19 pandemic exposure reports. Our analysis of 3038 firm-quarter earnings conference calls in 2020 reveals that overconfident CEOs express a less pessimistic tone, compared to non-overconfident CEOs when discussing their firms’ exposure to the pandemic, and these results hold under various robustness checks. Additionally, a more pronounced negative pandemic exposure sentiment predicts weaker subsequent operating performance among non-overconfident and overconfident CEOs alike. While increased negative sentiment leads to worse stock performance among firms with non-overconfident CEOs, this predictive power is significantly weakened for overconfident CEOs. Our findings provide insights into how CEO overconfidence can affect firms’ disclosure behavior during a crisis and contribute to the literature on CEO overconfidence and pandemic-related disclosures.
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Accepted/In Press date: 13 December 2024
e-pub ahead of print date: 20 January 2025
Published date: 4 June 2025
Keywords:
CEO overconfidence, COVID-19 pandemic, corporate disclosure
Identifiers
Local EPrints ID: 500082
URI: http://eprints.soton.ac.uk/id/eprint/500082
ISSN: 0306-686X
PURE UUID: 04349712-1c49-47a6-b063-310e8864f71e
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Date deposited: 15 Apr 2025 16:35
Last modified: 27 Aug 2025 01:48
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Author:
Thanh Ngo
Author:
Jurica Susnjara
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