Are Founder CEOs more Overconfident than Professional CEOs? Evidence from S&P 1500 Companies

We provide evidence that founder CEOs of large S&P 1500 companies are more overconfident than their non-founder counterparts (“professional CEOs”). We approximate overconfidence via CEO tweets, CEO statements during earnings-conference calls, management-earnings forecasts, and CEO option-exercise behavior. Compared with professional CEOs, founder CEOs use more optimistic language on Twitter and during earnings-conference calls. In addition, founder CEOs are more likely to issue earnings forecasts that are too high; they are also more likely to perceive their firm to be undervalued as implied by their option-exercise behavior. To date, investors appear unaware of the “overconfidence bias” among founders