Conservative traits and managerial forecasting style

Sara Bormann (), Debbie Claassen (), Christian Hofmann () and Nina Schwaiger ()
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Sara Bormann: Goethe-University Frankfurt
Debbie Claassen: BMW Group
Christian Hofmann: LMU Munich
Nina Schwaiger: LMU Munich

Journal of Business Economics, 2020, vol. 90, issue 3, No 1, 335-368

Abstract: Abstract We investigate whether conservatism as a personality trait, measured by managers’ signatures, influences managers’ forecasting style. Building on upper echelons theory and psychology literature, we predict that conservative personality traits such as the resistance to change and the ensuing cautiousness in updating beliefs influence managers’ forecasts. Our findings suggest that conservative CFOs more likely select earnings as compared to revenues as the main KPI of the forecast, keep the same KPI across years, and issue specific forecasts. Finally, we provide some evidence that conservative CFOs issue more accurate forecasts.

Keywords: Management forecasts; Conservatism; Upper echelons theory; Personality traits (search for similar items in EconPapers)
JEL-codes: M12 M41 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11573-019-00957-y

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