CEO overconfidence and the tone of press release

Rong Gong

Accounting and Finance, 2023, vol. 63, issue 2, 2081-2108

Abstract: This paper examines how CEO overconfidence affects the tone of press releases. Using option‐based proxies for CEO overconfidence, I find that over the 2000–2018 period, the press releases issued by firms with overconfident CEOs have more positive tone and receive more positive market reactions. The relation between CEO overconfidence and the tone of press releases is stronger among firms with good operating performance and concentrated in investment‐related news but is insignificant for earnings news. These findings suggest that CEO overconfidence leads to biases in press releases.

Date: 2023
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