THE EFFECT OF MANAGERIAL OVERCONFIDENCE ON CONFERENCE CALLS

Shu-Ling Chang, Long-Jainn Hwang and Chun-An Li

The International Journal of Business and Finance Research, 2020, vol. 14, issue 1, 1-22

Abstract: This study examines the relation between managerial overconfidence and conference calls. Prior studies document that some managers tend to be overconfident because they believe they have more precise knowledge about future events than they genuinely possess. Overconfident managers tend to convene conference calls since they are an important tool to disclose information about the future. We examine how managerial overconfidence affects the occurrence and frequency of conference calls using evidence from the Taiwan stock market. To measure managerial overconfidence, following Kolasinski and Li (2013), we use an example of managers purchasing their own firm’s stock over a two-year period, followed by negative average returns. Based on data from publicly listed firms in Taiwan for the period from 2005 to 2015, the results provide robust evidence, suggesting that managerial overconfidence and conference calls are significantly positively correlated. We find that companies with higher managerial overconfidence are likely to frequently convene conference calls. Prior research on managerial overconfidence mainly discussed the impact on financing and investment decisions, while this study provides further supplementary evidence of the impact of convening conference calls, and managerial decisions on disclosure behavior

Keywords: Conference Call; Managerial Overconfidence (search for similar items in EconPapers)
JEL-codes: D12 D25 M10 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ibf:ijbfre:v:14:y:2020:i:1:p:1-22

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