Are Founder CEOs more Overconfident than Professional CEOs? Evidence from S&P 1500 Companies

In one sentence

Founder CEOs of S&P 1500 firms appear more confident (overconfident?) than their non-founder counterparts. Our finding may explain why large publicly traded firms managed by founder CEOs behave so differently.

Summary

We measure CEO confidence via tone in their tweets, tone in earnings calls, management forecasts, and option exercise behavior. Founder CEOs use markedly more optimistic language and issue forecasts that, in the end, end up being much too high; founder CEOs also trade as if their firms were significantly undervalued by the market.

Research topics