Abstract
We study the informational role of overconfident CEOs. We find that the stocks of overconfident CEOs have lower analyst forecast dispersion, higher breadth of investor ownership, and lower informed trading intensity. These patterns also arise around CEO turnover. We also show that overconfident CEOs level the playing field between short sellers and other investors, as the (good) news in short interest (Boehmer, Huszar, and Jordan, 2010) exists only among stocks with non-overconfident CEOs and disappears among stocks with overconfident CEOs. Our results suggest that overconfident CEOs help increase information efficiency and lower the mispricing of their company shares.
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