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Can Firm Characteristics diminish CEO Optimism effect: the U.S. Securities Market Evidence

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  • Chia-Hsien Tang
  • Yen-Hsien Lee
  • Tsung-Hsien Lu

Abstract

This study aims to investigate the impact of CEO optimism on analyst’s forecast bias with data gathered from the years 1993 to 2015 in the US and to identify whether or not certain firm characteristics can ease analyst’s forecast bias affected by CEO optimism. These being: cash dividend changes, external financing, credit rating, and CEO gender and to verify firm characteristics have the ability to improve an analyst’s prediction or not as well as have the ability to reduce the impact of  CEO optimism on analyst forecast bias. The empirical findings have shown that optimistic CEOs are more likely to release higher earnings forecasts and increase analyst forecast bias. Analysts can reduce the forecast bias caused by optimistic CEOs by learning more about cash dividend changes, debt financing, credit ratings, and CEO gender. This effect is also more significant in relation to the analysts’ negative forecast bias. JEL classification numbers: G31, G32, G34, G38

Suggested Citation

  • Chia-Hsien Tang & Yen-Hsien Lee & Tsung-Hsien Lu, 2020. "Can Firm Characteristics diminish CEO Optimism effect: the U.S. Securities Market Evidence," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(4), pages 1-11.
    • Handle: RePEc:spt:admaec:v:10:y:2020:i:4:f:10_4_11
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    More about this item

    Keywords

    Analyst Forecast; CEO Optimism; Analysts Forecast Bias Sensitivity.;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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