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Article: Making the same mistake all over again: CEO overconfidence and corporate resistance to corrective feedback

TitleMaking the same mistake all over again: CEO overconfidence and corporate resistance to corrective feedback
Authors
Keywordsmanagement forecast accuracy
corrective feedback
CEO overconfidence
strategic decision making
managerial cognition
Issue Date2015
Citation
Strategic Management Journal, 2015, v. 36, n. 10, p. 1513-1535 How to Cite?
Abstract© 2014 John Wiley & Sons, Ltd. Firms often make mistakes, from simple manufacturing overruns all the way to catastrophic blunders. However, there is considerable heterogeneity in the nature of corporate responses when faced with evidence that an error has taken place, and, therefore, in the likelihood that such errors will reoccur in the future. In this paper, we explore an important but understudied influence on firms' responses to corrective feedback - a CEO's level of overconfidence. Using multiple distinct measures of overconfidence and the empirical context of voluntary corporate earnings forecasts, we find strong, robust evidence that firms led by overconfident CEOs are less responsive to corrective feedback in improving management forecast accuracy. We further show that this relationship is moderated by prior forecast error valence, time horizon, and managerial discretion.
Persistent Identifierhttp://hdl.handle.net/10722/256734
ISSN
2015 Impact Factor: 3.38
2015 SCImago Journal Rankings: 6.278

 

DC FieldValueLanguage
dc.contributor.authorChen, Guoli-
dc.contributor.authorCrossland, Craig-
dc.contributor.authorLuo, Shuqing-
dc.date.accessioned2018-07-24T08:57:45Z-
dc.date.available2018-07-24T08:57:45Z-
dc.date.issued2015-
dc.identifier.citationStrategic Management Journal, 2015, v. 36, n. 10, p. 1513-1535-
dc.identifier.issn0143-2095-
dc.identifier.urihttp://hdl.handle.net/10722/256734-
dc.description.abstract© 2014 John Wiley & Sons, Ltd. Firms often make mistakes, from simple manufacturing overruns all the way to catastrophic blunders. However, there is considerable heterogeneity in the nature of corporate responses when faced with evidence that an error has taken place, and, therefore, in the likelihood that such errors will reoccur in the future. In this paper, we explore an important but understudied influence on firms' responses to corrective feedback - a CEO's level of overconfidence. Using multiple distinct measures of overconfidence and the empirical context of voluntary corporate earnings forecasts, we find strong, robust evidence that firms led by overconfident CEOs are less responsive to corrective feedback in improving management forecast accuracy. We further show that this relationship is moderated by prior forecast error valence, time horizon, and managerial discretion.-
dc.languageeng-
dc.relation.ispartofStrategic Management Journal-
dc.subjectmanagement forecast accuracy-
dc.subjectcorrective feedback-
dc.subjectCEO overconfidence-
dc.subjectstrategic decision making-
dc.subjectmanagerial cognition-
dc.titleMaking the same mistake all over again: CEO overconfidence and corporate resistance to corrective feedback-
dc.typeArticle-
dc.description.natureLink_to_subscribed_fulltext-
dc.identifier.doi10.1002/smj.2291-
dc.identifier.scopuseid_2-s2.0-84941178428-
dc.identifier.volume36-
dc.identifier.issue10-
dc.identifier.spage1513-
dc.identifier.epage1535-
dc.identifier.eissn1097-0266-

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