CEO overconfidence and innovation / Alberto Galasso in Management science, Vol. 57 N° 8 (Août 2011)  

Public ISBD [article]  inManagement science > Vol. 57 N° 8 (Août 2011) . - pp. 1469-1484 Titre : CEO overconfidence and innovation Type de document : texte imprimé Auteurs : Alberto Galasso, Auteur ; Timothy S. Simcoe, Auteur Année de publication : 2011 Article en page(s) : pp. 1469-1484 Note générale : Management Langues : Anglais (eng) Mots-clés : Innovation R&D CEO overconfidence Managerial biases Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : Are the attitudes and beliefs of chief executive officers (CEOs) linked to their firms' innovative performance? This paper uses a measure of overconfidence, based on CEO stock-option exercise, to study the relationship between a CEO's “revealed beliefs” about future performance and standard measures of corporate innovation. We begin by developing a career concern model where CEOs innovate to provide evidence of their ability. The model predicts that overconfident CEOs, who underestimate the probability of failure, are more likely to pursue innovation, and that this effect is larger in more competitive industries. We test these predictions on a panel of large publicly traded firms for the years from 1980 to 1994. We find a robust positive association between overconfidence and citation-weighted patent counts in both cross-sectional and fixed-effect models. This effect is larger in more competitive industries. Our results suggest that overconfident CEOs are more likely to take their firms in a new technological direction. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/57/8.toc [article] CEO overconfidence and innovation [texte imprimé] / Alberto Galasso, Auteur ; Timothy S. Simcoe, Auteur . - 2011 . - pp. 1469-1484. Management Langues : Anglais (eng) in Management science > Vol. 57 N° 8 (Août 2011) . - pp. 1469-1484 Mots-clés : Innovation R&D CEO overconfidence Managerial biases Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : Are the attitudes and beliefs of chief executive officers (CEOs) linked to their firms' innovative performance? This paper uses a measure of overconfidence, based on CEO stock-option exercise, to study the relationship between a CEO's “revealed beliefs” about future performance and standard measures of corporate innovation. We begin by developing a career concern model where CEOs innovate to provide evidence of their ability. The model predicts that overconfident CEOs, who underestimate the probability of failure, are more likely to pursue innovation, and that this effect is larger in more competitive industries. We test these predictions on a panel of large publicly traded firms for the years from 1980 to 1994. We find a robust positive association between overconfidence and citation-weighted patent counts in both cross-sectional and fixed-effect models. This effect is larger in more competitive industries. Our results suggest that overconfident CEOs are more likely to take their firms in a new technological direction. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/57/8.toc

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