CEO happiness and forecasting

Karel Hrazdil, Xin Li and Nattavut Suwanyangyuan

Global Finance Journal, 2022, vol. 52, issue C

Abstract: We utilize the IBM Watson Tone Analyzer to measure chief executive officers' (CEOs') levels of joy (happiness) in year-end conference calls, and empirically test how CEOs' happiness affects the properties of their own and analysts' forecasts. We find that joyful CEOs are more likely to issue forecasts, less likely to miss their forecast targets, and exhibit lower optimistic bias in their forecasts. When joyful CEOs issue earnings forecasts, analysts revise their forecasts upwards and produce forecasts that are less dispersed and more accurate. Our results demonstrate that inherent CEO happiness significantly impacts the forecast properties of both managers and analysts, thus supporting upper echelons theory.

Keywords: Chief executive officer; Happiness; Joy; Personality; Forecast; Analysts (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:52:y:2022:i:c:s1044028322000151

DOI: 10.1016/j.gfj.2022.100713

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