The September-October issue of the Harvard Business Review features insights from their paper “Manager Sentiment and Stock Returns,” forthcoming in the Journal of Financial Economics. The article, “Beware of Excessively Chipper CEOs,” highlights the finding “that high degrees of positivity signal that managers are overconfident and apt to overinvest, causing profits to decline.”
In addition, Martin, a professor of accounting, was selected as the Poets&Quants Professor of the Week. The August 20 feature “WashU Olin’s Martin: When Managers Are Too Bullish, It’s Time to Sell” focuses on the same paper.
See the Olin article “When Upbeat Language Belies Downbeat Results” to learn about how Martin and Zhou conducted their research and its key takeaways.
Zhou is the Frederick Bierman & James E. Spears Professor of Finance and area chair.