Topic："Optimism or Over-Precision? What Drives the Role of Overconfidence in Managerial Decisions"

Speaker：Professor of Finance & Director of Research l UQ Business School, Robert Faff

Host: Professor Huang Ying, Director of Capital Market Research Center, Zhejiang University

Time: Nov. 23, 2017 (Thursday) 18: 30-20: 00

Venue: Xixi Hall, 1st Floor, Alumni Activity Center (Li Moxi Building), Zijingang Campus, Zhejiang University

Abstract

Overconfidence can be viewed as having two dimensions: optimism and over-precision. Extant empirical studies focus mostly on the former due to the difficulty in measuring the latter. This study develops accessible empirical measures to disentangle these two dimensions through a novel exploitation of earnings forecasts issued by firm managers. These measures capture appreciably different aspects of the link between overconfidence and managerial decisions. In terms of investment, CEOs displaying excess precision are more likely to scale up investment in real assets (especially via M&A); firms with more optimistic CEOs display no such proclivity. On the financing side, more optimistic CEOs and overly precise CEOs share a higher propensity to issue debt. [Available at SSRN: https://ssrn.com/abstract=2910840]

Bio

Research Director, UQ Business School. Robert has an international reputation in finance research: securing 13 Australian Research Council grants (> $4 million); >300 refereed journal publications; career citations >10,500; h-index of 53 (Google Scholar). His particular passion is nurturing and developing the career trajectories of early career researchers. Robert has supervised more than 30 PhD students to successful completion and examined 50 PhD dissertations. Building on a 35-year academic career, his latest passion is “Pitching Research”, now gaining great traction domestically and worldwide as exemplified by: >10,700 SSRN downloads; >220 pitching talks/events; at 37 Australian universities; and spanning 47 countries/jurisdictions.