Emotions and Managerial Judgment: Evidence from Sunshine Exposure

Medientyp: E-Book

Titel: Emotions and Managerial Judgment : Evidence from Sunshine Exposure

Beteiligte: Chen, Chen [Verfasser:in]; Chen, Yangyang [Sonstige Person, Familie und Körperschaft]; Pittman, Jeffrey [Sonstige Person, Familie und Körperschaft]; Podolski, Edward [Sonstige Person, Familie und Körperschaft]; Veeraraghavan, Madhu [Sonstige Person, Familie und Körperschaft]

Erschienen: [S.l.]: SSRN, [2019]

Umfang: 1 Online-Ressource (60 p)

Sprache: Englisch

DOI: 10.2139/ssrn.2973184

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Anmerkungen: Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 28, 2019 erstellt

Beschreibung: We examine the role and economic consequences of emotions in influencing the judgment of corporate executives. Analyzing a large sample of U.S. public firms, we find that sunshine-induced good mood leads managers to make upwardly biased earnings forecasts. Importantly, our evidence implies that managers become less susceptible to the sunshine priming effect when the information environment is more certain, external monitoring is stricter, and managerial incentive structures are stronger. Additional results suggest that market participants are capable of unraveling sunshine-induced biased forecasts, and that managers who are prone to the sunshine priming effect impose costs on their firms in the form of higher information risk and equity financing costs. Reflecting that labor markets also play a disciplinary role, we find that mood prone managers suffer adverse career outcomes. Our paper is the first large-scale study to document the nuanced ways in which emotions affect top executives

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