The impact of overconfident customers on supplier firm risks

Yiwei Fang; Iftekhar Hasan; Chih Yung Lin; Jiong Sun

doi:10.1016/j.jebo.2022.01.005

The impact of overconfident customers on supplier firm risks

Yiwei Fang, Iftekhar Hasan, Chih Yung Lin, Jiong Sun^*

^*此作品的通信作者

資訊管理與財務金融學系

研究成果: Article › 同行評審

6 引文斯高帕斯（Scopus）

摘要

Research has shown that firms with overconfident chief executive officers (CEOs) tend to overinvest and are exposed to high risks due to unrealistically optimistic estimates of their firms’ future performance. This study finds evidence that overconfident CEOs also affect suppliers’ risk taking. Specifically, serving overconfident customers can lead to high supplier risks, measured by stock volatility, idiosyncratic risk, and market risk. The effects are pronounced when customers aggressively invest in research and development (R&D). Our results are robust after addressing self-selection bias and using different CEO overconfidence measures. We also document some real effects of customer CEO overconfidence on suppliers.

原文	English
頁（從 - 到）	115-133
頁數	19
期刊	Journal of Economic Behavior and Organization
卷	197
DOIs	https://doi.org/10.1016/j.jebo.2022.01.005
出版狀態	Published - 5月 2022

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10.1016/j.jebo.2022.01.005

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title = "The impact of overconfident customers on supplier firm risks",

abstract = "Research has shown that firms with overconfident chief executive officers (CEOs) tend to overinvest and are exposed to high risks due to unrealistically optimistic estimates of their firms{\textquoteright} future performance. This study finds evidence that overconfident CEOs also affect suppliers{\textquoteright} risk taking. Specifically, serving overconfident customers can lead to high supplier risks, measured by stock volatility, idiosyncratic risk, and market risk. The effects are pronounced when customers aggressively invest in research and development (R&D). Our results are robust after addressing self-selection bias and using different CEO overconfidence measures. We also document some real effects of customer CEO overconfidence on suppliers.",

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author = "Yiwei Fang and Iftekhar Hasan and Lin, {Chih Yung} and Jiong Sun",

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AU - Hasan, Iftekhar

AU - Lin, Chih Yung

AU - Sun, Jiong

PY - 2022/5

Y1 - 2022/5

N2 - Research has shown that firms with overconfident chief executive officers (CEOs) tend to overinvest and are exposed to high risks due to unrealistically optimistic estimates of their firms’ future performance. This study finds evidence that overconfident CEOs also affect suppliers’ risk taking. Specifically, serving overconfident customers can lead to high supplier risks, measured by stock volatility, idiosyncratic risk, and market risk. The effects are pronounced when customers aggressively invest in research and development (R&D). Our results are robust after addressing self-selection bias and using different CEO overconfidence measures. We also document some real effects of customer CEO overconfidence on suppliers.

AB - Research has shown that firms with overconfident chief executive officers (CEOs) tend to overinvest and are exposed to high risks due to unrealistically optimistic estimates of their firms’ future performance. This study finds evidence that overconfident CEOs also affect suppliers’ risk taking. Specifically, serving overconfident customers can lead to high supplier risks, measured by stock volatility, idiosyncratic risk, and market risk. The effects are pronounced when customers aggressively invest in research and development (R&D). Our results are robust after addressing self-selection bias and using different CEO overconfidence measures. We also document some real effects of customer CEO overconfidence on suppliers.

KW - CEO overconfidence

KW - firm risk

KW - Supply chain

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DO - 10.1016/j.jebo.2022.01.005

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VL - 197

SP - 115

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JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

ER -

The impact of overconfident customers on supplier firm risks

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