Yes, according to a recently released study by David A. Hirshleifer (University of California, Irvine – Paul Merage School of Business), Siew Hong (University of California, Irvine – Paul Merage School of Business) Teoh and Angie Low (Nanyang Technological University – Division of Banking & Finance).
Using options- and press-based proxies for CEO overconfidence (Malmendier and Tate 2005a, 2005b, 2008), we find that over the 1993-2003 period, firms with overconfident CEOs have greater return volatility, invest more in innovation, obtain more patents and patent citations, and achieve greater innovative success for given research and development (R&D) expenditure. Overconfident managers only achieve greater innovation than non-overconfident managers in innovative industries. Overconfidence is not associated with lower sales, ROA, or Q.
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Author: Ariel Goldring
