Schumacher, Christian, Keck, Steffen, Tang, Wenjie. 2020. Biased interpretation of performance feedback: The role of CEO overconfidence. Strategic Management Journal. 41 (6), 1139-1165.
BibTeX
Abstract
This study examines how managerial biases in the form of overconfidence change the interpretation of performance feedback and, consequently, shape a firm's risk taking in response to it. Our formal analysis suggests that CEO overconfidence is associated with a lower willingness to increase firm risk taking when facing negative performance feedback and a higher willingness to decrease risk when facing positive feedback. An extension of our model also shows that, when firms are operating close to their survival level, the effects of CEO overconfidence will reverse. We test our predictions empirically with a sample of 847 American manufacturing firms in the years 1992 to 2014. Our results are consistent with our hypotheses and are robust to different empirical operationalizations of CEO overconfidence.
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Status of publication | Published |
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Affiliation | WU |
Type of publication | Journal article |
Journal | Strategic Management Journal |
Citation Index | SSCI |
WU Journalrating 2009 | A+ |
Starjournal | Y |
Language | English |
Title | Biased interpretation of performance feedback: The role of CEO overconfidence |
Volume | 41 |
Number | 6 |
Year | 2020 |
Page from | 1139 |
Page to | 1165 |
Reviewed? | Y |
URL | https://onlinelibrary.wiley.com/doi/full/10.1002/smj.3138 |
DOI | https://doi.org/10.1002/smj.3138 |
Open Access | Y |
Open Access Link | https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.3138 |
Associations
- People
- Schumacher, Christian (Former researcher)
- External
- Keck, Steffen (University of Vienna, Austria)
- Tang, Wenjie (NUS, Singapore)
- Organization
- Institute for International Business (Mohr) (Details)