Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
권호 표지
DOI QR코드

DOI QR Code

Managerial Overconfidence and Stock Price Delay

경영자과신성향이 주가지체에 미치는 영향

  • Myung-Gun Lee (Department of Accounting & Taxation, Yeungnam University) ;
  • Young-Tae Yoo (Department of Tax & Accounting, Incheon National University)
  • 이명건 (영남대학교 회계세무학과) ;
  • 유영태 (인천대학교 세무회계학과)
  • Received : 2023.08.31
  • Accepted : 2023.09.21
  • Published : 2023.09.30
Download PDF
⟨ Previous Next ⟩

Abstract

Purpose - This study deals with the manager's overconfidence and stock price delay, and verified whether the stock price delay phenomenon changes as the overconfidence increases. Design/methodology/approach - Manager overconfidence means that managers have over confidence in their positions or abilities, and was measured according to Schrand and Zechman (2012). Stock price delay is a phenomenon in which information of company is not immediately reflected in the stock price, but is reflected over time, and was measured by the method suggested in a study by Hou and Moskowitz (2005). The analysis subjects used in this study are companies listed on the KOSPI market between 2011 and 2019, and the final sample is 5,509 company-years. Findings - As a result of the verification, it was shown that the stock price delay decreased as the manager's overconfidence increased, and this effect was amplified as the foreign shareholder's share ratio increased and the number of follow-up financial analysts increased. This means that as the manager's overconfidence increases, he actively provides high-quality information to the capital market. In addition, as a result of subdividing the manager's overconfidence into the investment and capital raising aspects, the capital raising aspect has a significant effect on reducing stock delays. This can be interpreted as the fact that managers with overconfident tendencies have a greater incentive to satisfy investors' information needs. Research implications or Originality - In previous studies, the characteristics of managers with strong overconfidence have both positive and negative aspects. The results of this study are significant in that they clearly demonstrated the positive aspect through the market variable of stock price delay, and it is expected to help capital market stakeholders understand the characteristics of managers with a strong propensity for overconfidence.

Keywords

Acknowledgement

이 연구는 2021년도 영남대학교 학술연구조성비에 의한 것임.

References

  1. 강선아, 유지연 (2017), "산업특성이 경영자의 낙관적 성향과 경영성과의 관계에 미치는 영향", 관리회계연구, 17(2) : 85-109.
  2. 김민수, 이명건 (2019), "회계정보의 보수주의와 주가지체현상에 관한 연구", 경영연구, 34(4), 29-50. https://doi.org/10.22903/JBR.2019.34.4.29
  3. 김민수, 최희정 (2020), "애널리스트 예측이 주가지체에 미치는 영향에 관한 연구", 재무관리연구, 37(4), 83-111. https://doi.org/10.22510/KJOFM.2020.37.4.004
  4. 김상미, 신희정, 김수인 (2018), "경영자 과신성향이 감사보수에 미치는 영향", 회계세무와감사연구, 60(1), 67-95.
  5. 안윤영, 신현한, 장진호 (2005), "외국인투자자와 정보비대칭 간의 관계", 회계학연구, 30(4), 109-131.
  6. 이혜미, 홍창목 (2018), "경영자의 과신성향과 주가정보성", 경영학연구, 47(5), 1201-1230.
  7. 전영순 (2003), "외국인투자자 및 국내 기관투자가의 투자의사결정과 회계이익의 질", 경영학연구, 32(4), 1001-1032.
  8. 황규영, 김응길 (2018), "경영자의 자기과신 성향과 배당성향의 관계: 재벌기업을 중심으로", 금융정보연구, 7(1), 61-90. https://doi.org/10.35214/RFIS.7.1.201802.003
  9. Ahmed, A. S., and S. Duellman (2013), "Managerial overconfidence and accounting conservatism", Journal of Accounting Research, 51(1), 1-30 https://doi.org/10.1111/j.1475-679X.2012.00467.x
  10. Altinkilic, O. and R. Hansen (2009), "On the Information Role of Stock Recommendation Revisions", Journal of Accounting and Economics, 48, 17-36. https://doi.org/10.1016/j.jacceco.2009.04.005
  11. Asquith, P., M. B. Mikhail, and A. S. Au (2005), "Information Content of Equity Analyst Report", Journal of Financial Economics, 75, 245-282. https://doi.org/10.1016/j.jfineco.2004.01.002
  12. Baik, B., B. Billings, R. Morton, and D. Park (2013, December, 21), "Does Financial Statement Comparability reduce Stock Price Delay?" The Korean Accounting Association Korean Accounting Association 2013 Winter Symposium, Seoul, South Korea
  13. Baker, M., and J. Wurgler (2013), "Behavioral Corporate Finance: An Updated Survey", Handbook of the Economics of Finance, 2, 357-424, Elsevier. https://doi.org/10.1016/B978-0-44-453594-8.00005-7
  14. Barry, C., and R. Jennings (1992), "Information and Diversity of Analyst Opinion", Journal of Financial and Quantitative Analysis, 27, 169-183. https://doi.org/10.2307/2331366
  15. Ben-David, I., J. Graham, and C. Harvey (2012), "Managerial miscalibration", The Quarterly Journal of Economics, 128(4), 1547-1584
  16. Bernardo, A. E., and I. Welch (2001), "On the evolution of overconfidence and entrepreneurs", Journal of Economics and Management Strategy, 10(3), 301-330
  17. Black, F. (1976), "Studies of stock price volatility changes", Proceedings of the 1976 Meeting of the Business and Economic Statistics Section, American Statistical Association, Washington DC, 177-181.
  18. Bradley, D., J. Clarke, S. Lee, and C. Ornthanalai (2014), "Are Analysts' Recommendations Informative? Intraday Evidence on the Impact of Time Stamp Delays", Journal of Finance, 69, 645-673. https://doi.org/10.1111/jofi.12107
  19. Brennan, M. J., N. Jegadeesh, N., and B. Swaminathan (1993), "Investment Analysis and the Adjustment of Stock Prices to Common Information", Review of Financial Studies, 6, 799-824. https://doi.org/10.1093/rfs/6.4.799
  20. Brown, R., and N. Sarma (2007), "CEO Overconfidence, CEO Dominance and Corporate Acquisitions", Journal of Economics and Business, 59(5), 358-379. https://doi.org/10.1016/j.jeconbus.2007.04.002
  21. Callen, J. L., M. Khan, and H. Lu (2013), "Accounting quality, stock price delay, and future stock returns", Contemporary Accounting Research, 30, 269-295. https://doi.org/10.1111/j.1911-3846.2011.01154.x
  22. Chen, S. S., S. M. Lai, C. L. Liu, and S. E. McVay (2021), Exploring Differential Net Benefits to Internal Control: An Examination of Firms with Overconfident Managers (Working Paper). Available from SSRN: https://ssrn.com/abstract=2510137
  23. Chordia, T., and B. Swaminathan (2000), "Trading Volume and Cross-Autocorrelation in Stock Returns", Journal of Finance, 55, 913-935 https://doi.org/10.1111/0022-1082.00231
  24. Christie, A. A. (1982), "A Stochastic Behavior of Common Stock Variances-Value, Leverage and Interest Rate Effects", Journal of Financial Economics, 10, 407-432. https://doi.org/10.1016/0304-405X(82)90018-6
  25. Deshmukh, S., A. M. Goel, A. M, and K. M. Howe (2013), "CEO Overconfidence and Dividend Policy", Journal of Financial Intermediation, 22(3), 440-463. https://doi.org/10.1016/j.jfi.2013.02.003
  26. Dow, J., I. Goldstein, and A. Guembel. (2006), Commitment to Overinvest and Price Informativeness (Working Paper). Available from https://ssrn.com/abstract=846245
  27. Galasso, A., and T. S. Simcoe (2011), "CEO overconfidence and innovation", Management Science, 57(8), 1469-1484. https://doi.org/10.1287/mnsc.1110.1374
  28. Hayward, M. L. A., V. P. Rindova, and T. G. Pollock (2004), "Believing one's own press: The causes and consequences of CEO celebrity", Strategic Management Journal, 25(7), 637-653. https://doi.org/10.1002/smj.405
  29. Heaton, J. (2002), "Managerial optimism and corporate finance", Financial Management, 31, 33-45. https://doi.org/10.2307/3666221
  30. Hirshleifer, D., A. Low, and S. H. Teoh (2012), "Are overconfident CEOs better innovators?", The Journal of Finance, 67(4), 1457-1498. https://doi.org/10.1111/j.1540-6261.2012.01753.x
  31. Hong, H., and J. C. Stein (1999), "A Unified Theory of Underreaction, Momentum Trading and Overreaction in Asset Markets", Journal of Finance, 54, 2143-2184. https://doi.org/10.1111/0022-1082.00184
  32. Hong, H., T. Lim, and J. C. Stein (2000), "Bad news travels slowly: Size, analyst coverage and the profitability of momemtum strategies", Journal of Finance, 55, 265-295. https://doi.org/10.1111/0022-1082.00206
  33. Hou, K., and T. J. Moskowitz (2005), "Market frictions, price delay, and the cross-section of expected returns", The Review of Financial Studies, 18(3), 981-1020. https://doi.org/10.1093/rfs/hhi023
  34. Hribar, P., and H. Yang (2016), "CEO overconfidence and Management Forecasting", Contemporary Accounting Research, 33(1), 204-227. https://doi.org/10.1111/1911-3846.12144
  35. Kramer, L. A., and C. M. Liao (2016), "The Spillover Effects of Management Overconfidence on Analyst Forecasts", Journal of Behavioral and Experimental Finance, 12, 79-92 https://doi.org/10.1016/j.jbef.2016.10.004
  36. Lo, A. W., and A. C. Mackinlay (1990), "When Are Contrarian Profits Due to Stock Market Overreaction?", Review of Financial Studies, 3, 175-205. https://doi.org/10.1093/rfs/3.2.175
  37. Malmendier, U., and G. Tate (2005), "CEO overconfidence and corporate investment", Journal of Finance, 60(2), 661-700. https://doi.org/10.1111/j.1540-6261.2005.00813.x
  38. Malmendier, U., and G. Tate (2008), "Who makes acquisitions? CEO overconfidence and the market's reaction", Journal of Financial Economics, 89, 20-43. https://doi.org/10.1016/j.jfineco.2007.07.002
  39. Peng, L. (2005), "Learning with Information Capacity Constraints", Journal of Financial and Quantitative Analysis, 40, 307-329 https://doi.org/10.1017/S0022109000002325
  40. Presley, T. J., and L. J. Abbott (2013), "CEO overconfidence and the incidence of financial restatement", Advances in Accounting, 29(1), 74-84. https://doi.org/10.1016/j.adiac.2013.03.007
  41. Russo, J. E., and P. J. H. Schoemaker (1992), "Managing overconfidence", Sloan Management Review, 33(2), 7-17.
  42. Schrand, C., and S. Zechman (2012), "Executive overconfidence and the slippery slope to financial misreporting", Journal of Accounting and Economics, 53(1-2), 311-329. https://doi.org/10.1016/j.jacceco.2011.09.001
  43. Verrecchia, R. (1980), "The Rapidity of Price Adjustments to Information", Journal of Accounting and Economics, 2, 63-92. https://doi.org/10.1016/0165-4101(80)90015-4
  44. Wei, Chishen and L. Zhang (2018), The Informational Role of Overconfident CEOs (Working Paper). Available from https://ssrn.com/abstract=2823716