Tweets from the Top: CEO Overconfidence and Twitter Behavior
We analyze firms’ and CEOs’ tweeting behavior from 2008 to 2021 and find that firms led by overconfident CEOs tweet more frequently across an array of topics – including business and finance – use more embellishment, hedge less in their statements, and engage in greater self-reference compared to firms with non-overconfident CEOs. These effects are stronger around substantive firm events that require public filings and generate abnormally high engagement. Around M&A deal announcements, abnormal deviations from an overconfident CEO’s ‘expected’ tweeting are viewed by the market as a negative signal of deal quality. Our findings suggest that overconfident CEOs appear to encourage greater public interaction with stakeholders, and the content of those interactions have the hallmarks of the firm attempting to influence public perception.