ARTICLE
The Effect of CEO Overconfidence on Corporate Disclosures Amid a Pervasive Shock: Evidence From the COVID-19 Pandemic
Surendranath Jory,
Thanh Ngo,
Jurica Susnjara,
Surendranath Jory
Department of Banking and Finance, University of Southampton, Southampton, UK
Search for more papers by this authorThanh Ngo
Department of Finance and Insurance, East Carolina University, Greenville, North Carolina, USA
Search for more papers by this authorCorresponding Author
Jurica Susnjara
Department of Finance and Economics, Barry University, Miami Shores, Florida, USA
Correspondence: Jurica Susnjara ([email protected])
Search for more papers by this authorSurendranath Jory,
Thanh Ngo,
Jurica Susnjara,
Surendranath Jory
Department of Banking and Finance, University of Southampton, Southampton, UK
Search for more papers by this authorThanh Ngo
Department of Finance and Insurance, East Carolina University, Greenville, North Carolina, USA
Search for more papers by this authorCorresponding Author
Jurica Susnjara
Department of Finance and Economics, Barry University, Miami Shores, Florida, USA
Correspondence: Jurica Susnjara ([email protected])
Search for more papers by this authorFirst published: 20 January 2025
ABSTRACT
We investigate how CEO overconfidence affect firms’ voluntary reporting of COVID-19 exposure using text-based measures of firm-level COVID-19 pandemic exposure reports. Our analysis of 3038 firm-quarter earnings conference calls in 2020 reveals that overconfident CEOs express a less pessimistic tone, compared to non-overconfident CEOs when discussing their firms’ exposure to the pandemic, and these results hold under various robustness checks. Additionally, a more pronounced negative pandemic exposure sentiment predicts weaker subsequent operating performance among non-overconfident and overconfident CEOs alike. While increased negative sentiment leads to worse stock performance among firms with non-overconfident CEOs, this predictive power is significantly weakened for overconfident CEOs. Our findings provide insights into how CEO overconfidence can affect firms’ disclosure behavior during a crisis and contribute to the literature on CEO overconfidence and pandemic-related disclosures.
Open Research
Data Availability Statement
The data that support the findings of this study are available from Execucomp and Compustat Fundamental Quarterly. Restrictions apply to the availability of these data, which were used under license for this study. Data are available from the authors with the permission of Execucomp and Compustat Fundamental Quarterly.
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