Impact of overconfidence among finance managers on forecasted market returns: Evidence from India
The current article studies the impact of overconfidence among finance managers on forecasted market returns in India. Overconfidence among finance managers is measured using a standardised questionnaire and data is collected from February, 2017 to October, 2018. Snowball sampling is used as the sam...
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| Veröffentlicht in: | Journal of public affairs 2022-05, Vol.22 (2), p.n/a |
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| creator | Mundi, Hardeep Singh Nagpal, Era |
| description | The current article studies the impact of overconfidence among finance managers on forecasted market returns in India. Overconfidence among finance managers is measured using a standardised questionnaire and data is collected from February, 2017 to October, 2018. Snowball sampling is used as the sampling technique to collect data from 200 finance managers. The secondary data for the study is collected from the Centre for Monitoring Indian Economy (CMIE) Prowess. Overconfidence among finance managers is modelled as per the methodology of Ben‐David, et al. (2013). After running a regression model to test whether overconfidence among finance managers results in more accurate forecasts of market returns, it is found that overconfident finance managers predict forecasted error with more accuracy and also predict narrow confidence intervals. Fama and MacBeth regression results present that finance managers are overconfident after their decisions of forecasted market returns are accurate. Overconfidence among managers is not due to the skill of managers but is present because overconfident managers are often miscalibrated. Key words: Behavioural corporate finance, bias of overconfidence, decision‐making, forecasted market returns. |
| doi_str_mv | 10.1002/pa.2349 |
| format | Article |
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Overconfidence among finance managers is measured using a standardised questionnaire and data is collected from February, 2017 to October, 2018. Snowball sampling is used as the sampling technique to collect data from 200 finance managers. The secondary data for the study is collected from the Centre for Monitoring Indian Economy (CMIE) Prowess. Overconfidence among finance managers is modelled as per the methodology of Ben‐David, et al. (2013). After running a regression model to test whether overconfidence among finance managers results in more accurate forecasts of market returns, it is found that overconfident finance managers predict forecasted error with more accuracy and also predict narrow confidence intervals. Fama and MacBeth regression results present that finance managers are overconfident after their decisions of forecasted market returns are accurate. Overconfidence among managers is not due to the skill of managers but is present because overconfident managers are often miscalibrated. 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Overconfidence among finance managers is measured using a standardised questionnaire and data is collected from February, 2017 to October, 2018. Snowball sampling is used as the sampling technique to collect data from 200 finance managers. The secondary data for the study is collected from the Centre for Monitoring Indian Economy (CMIE) Prowess. Overconfidence among finance managers is modelled as per the methodology of Ben‐David, et al. (2013). After running a regression model to test whether overconfidence among finance managers results in more accurate forecasts of market returns, it is found that overconfident finance managers predict forecasted error with more accuracy and also predict narrow confidence intervals. Fama and MacBeth regression results present that finance managers are overconfident after their decisions of forecasted market returns are accurate. Overconfidence among managers is not due to the skill of managers but is present because overconfident managers are often miscalibrated. Key words: Behavioural corporate finance, bias of overconfidence, decision‐making, forecasted market returns.</description><subject>Behavioural corporate finance</subject><subject>bias of overconfidence</subject><subject>Corporate finance</subject><subject>Data</subject><subject>decision‐making</subject><subject>Earnings forecasting</subject><subject>Finance</subject><subject>Finance managers</subject><subject>forecasted market returns</subject><subject>Markets</subject><subject>Sampling</subject><subject>Snowball sampling</subject><issn>1472-3891</issn><issn>1479-1854</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2022</creationdate><recordtype>article</recordtype><sourceid>7TQ</sourceid><recordid>eNp1kE1PAjEQhhujiYjGv9DEgwez2HZLl3ojBJWERA96brrtlCyy7douGP69Rbh6mo88M_POi9AtJSNKCHvs9IiVXJ6hAeWVLOhkzM__claUE0kv0VVK6wxSzukA6UXbadPj4HDYQTTBu8aCN4B1G_wKu8brQ9Vqr1cQEw4euxDB6NSDze34BT2O0G-jT094vjtNuxhavPC20dfowulNgptTHKLP5_nH7LVYvr0sZtNlYdhEyoJZKAkILp1lWRk3WggOpublxApTgjREA621pbauKkaEAKIrC1ZyWZtKlEN0d9zbxfC9hdSrdcii8knFhKAlH-e9mbo_UiaGlCI41cUmf7FXlKiDf6rT6uBfJh-O5E-zgf1_mHqf_tG_5jJw_w</recordid><startdate>202205</startdate><enddate>202205</enddate><creator>Mundi, Hardeep Singh</creator><creator>Nagpal, Era</creator><general>Wiley Subscription Services, Inc</general><scope>AAYXX</scope><scope>CITATION</scope><scope>7TQ</scope><scope>8BJ</scope><scope>DHY</scope><scope>DON</scope><scope>FQK</scope><scope>JBE</scope><orcidid>https://orcid.org/0000-0001-5835-5988</orcidid></search><sort><creationdate>202205</creationdate><title>Impact of overconfidence among finance managers on forecasted market returns: Evidence from India</title><author>Mundi, Hardeep Singh ; Nagpal, Era</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c2899-2de30e649fd24414ca664ecb438d6c3e9c0ae1bad1db772066e0a7ded949bc763</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2022</creationdate><topic>Behavioural corporate finance</topic><topic>bias of overconfidence</topic><topic>Corporate finance</topic><topic>Data</topic><topic>decision‐making</topic><topic>Earnings forecasting</topic><topic>Finance</topic><topic>Finance managers</topic><topic>forecasted market returns</topic><topic>Markets</topic><topic>Sampling</topic><topic>Snowball sampling</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Mundi, Hardeep Singh</creatorcontrib><creatorcontrib>Nagpal, Era</creatorcontrib><collection>CrossRef</collection><collection>PAIS Index</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>PAIS International</collection><collection>PAIS International (Ovid)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of public affairs</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Mundi, Hardeep Singh</au><au>Nagpal, Era</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Impact of overconfidence among finance managers on forecasted market returns: Evidence from India</atitle><jtitle>Journal of public affairs</jtitle><date>2022-05</date><risdate>2022</risdate><volume>22</volume><issue>2</issue><epage>n/a</epage><issn>1472-3891</issn><eissn>1479-1854</eissn><abstract>The current article studies the impact of overconfidence among finance managers on forecasted market returns in India. Overconfidence among finance managers is measured using a standardised questionnaire and data is collected from February, 2017 to October, 2018. Snowball sampling is used as the sampling technique to collect data from 200 finance managers. The secondary data for the study is collected from the Centre for Monitoring Indian Economy (CMIE) Prowess. Overconfidence among finance managers is modelled as per the methodology of Ben‐David, et al. (2013). After running a regression model to test whether overconfidence among finance managers results in more accurate forecasts of market returns, it is found that overconfident finance managers predict forecasted error with more accuracy and also predict narrow confidence intervals. Fama and MacBeth regression results present that finance managers are overconfident after their decisions of forecasted market returns are accurate. 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| fulltext | fulltext |
| identifier | ISSN: 1472-3891 |
| ispartof | Journal of public affairs, 2022-05, Vol.22 (2), p.n/a |
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| language | eng |
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| source | Wiley Online Library - AutoHoldings Journals; PAIS Index; EBSCOhost Business Source Complete |
| subjects | Behavioural corporate finance bias of overconfidence Corporate finance Data decision‐making Earnings forecasting Finance Finance managers forecasted market returns Markets Sampling Snowball sampling |
| title | Impact of overconfidence among finance managers on forecasted market returns: Evidence from India |
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