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This paper examines the effects of managerial optimism on corporate cash holdings.

The authors construct a novel measure of managerial optimism based on the linguistic tone of annual reports by applying a Naïve Bayesian Machine Learning algorithm to non-numeric parts of Vietnamese listed firms' reports from 2010 to 2016. The paper employs firm and year fixed effects model and also uses the generalized method of moments estimation as robustness checks.

The authors find that the cash holding of firms managed by optimistic managers is higher than the cash holdings of firms managed by non-optimistic managers. Managerial optimism also influences corporate cash holdings through internal cash flows and the current year’s capital expenditures. Although the authors find no evidence that optimistic managers hold more cash to finance future growth opportunities in general, optimistic managers hold more cash for near future investment opportunities than non-optimistic managers do.

The novel measure proposed in this study is expected to provide great potential for future finance studies investigating the relation between managerial traits and corporate policies since it is applicable for any levels of financial market development. In addition, the findings highlight the important role, both direct and indirect, of managerial optimism on cash holdings. Related future research should take this psychological trait into account to gain a better understanding of corporate cash holding.

This paper helps to extend the literature on managerial optimism measurement by introducing a new measure of managerial optimism based on the linguistic tone of annual reports. Furthermore, this is among the first studies directly linking annual report linguistic tone to cash holding. The paper also provides new evidence regarding how managerial optimism affects the relationship between the firm's growth opportunities and cash holding, given that mispricing corrections are naturally uncertain.

The purpose of this paper is to focus on investor reactions to unanticipated changes in income, and whether those reactions can be mitigated by managerial discussion. The authors investigate how top-management team certainty and optimism during post-earnings announcement conference calls can serve as corrective actions and add back firm value in times of unexpected changes in firm-specific risk.

The research question is tested empirically in the context of large, publicly traded, US firms’ quarterly earnings announcements, and their subsequent post-earnings announcement conference calls. The authors use the advanced content analysis software DICTION to measure the levels of managerial certainty and optimism displayed during post-earnings announcement conference calls, and event-study methodology to measure investors’ reactions.

Results indicate that earnings surprises are negatively associated with firm value, but that this relationship is mitigated positively by displays of managerial certainty and optimism during post-earnings announcement conference calls.

This work uses an innovative research design to study top-management team rhetoric in post-earnings announcement conference calls, and how specific discussions mitigate investors’ negative reactions to increases in firm-specific risk. The study highlights the importance of top-management team certainty and optimism for value creation in times of change in firm-specific risk, and the importance of rhetoric as a tool for corrective action.

Growth optimism, which describes the expected future growth of a firm, is an important but underexplored construct in strategy. This paper aims to assess the planning antecedents of such growth optimism by using a large Australian sample of small enterprises.

The authors use a secondary data set, gathered among Australian small to medium enterprises (SMEs), by the Australian Bureau of Statistics (ABS). The analysis adopts a regression approach including a mediated and a non-mediated path to explore the direct and indirect effects of strategic planning and budgetary planning and management on expected future revenues.

This paper assesses the implications of concurrent strategic planning and financial management dynamic capabilities on anticipated future revenue growth, an important predisposition dynamic capability. The authors note that this configuration of actions and predisposition aligns closely with the necessary requirements for growth. The findings suggest that firms that use strategic planning and robust budget planning and monitoring processes exhibit higher optimism about future sales growth and firms that effectively configure these planning activities with market development tend to exhibit higher growth and more growth optimism.

In terms of theoretical contributions, the paper strongly supports the formality view in the formal/informal debates associated with effectuation strategies. The authors suggest that appropriate strategic and budgetary planning and control systems act as a counterbalance to organisational confusion and managerial capriciousness, leading to improved confidence among managers and their employees regarding future resource commitments and plans.

The findings of the paper are potentially important for both managers and policy makers. For managers seeking to grow their future sales, planning is shown to be an important antecedent activity. The presence of financial and strategic planning may predispose firms to make important investment decisions that drive future growth. Also, a better understanding of the firm’s current and future strategic and financial position may be evidence of effective firm management, a situation that, in turn, drives growth.

In terms of social and policy implications, the data gathered for the survey by the ABS forms a valuable collection of information in relation to business practices. Australian firms are required by law to regularly report budget plans and outcomes. The research suggests that this data can inform policy initiatives, particularly in relation to programmes that may assist small and young firms to undertake prospective strategic and budgetary planning.

To the best of the authors’ knowledge, this is the first paper to investigate the particular configuration of strategic and financial planning and anticipated sales growth in the SME context.

This paper aims to investigate the potential influence of managers on sustainability assurance. When the quality of sustainability reporting is questionable because of subsequent restatements, the authors explore whether assurance is used to enhance its credibility as a legitimization tool or as an impression management strategy. Additionally, the authors analyze how capital markets react to this potential managerial capture and, particularly, whether investors penalize this practice through the cost of capital.

Using an international sample from 2012 to 2016 and panel data regressions, this study relies on DICTION’s master variables of optimism and certainty to examine the impact of managers on assurance and the market’s reaction to these practices.

The study shows that some managers might use assurance as a legitimization tool rather than as a means of reinforcing the credibility of sustainability reporting. In such cases, the results reveal that investors penalize (reward) managerial influence (no influence) on assurance.

The new findings help companies understand that they will not improve their financing terms if investors perceive that managers have influenced assurance. Moreover, these findings emphasize the need for standardization to clarify assurance criteria and prevent managerial influence.

Managerial influence on assurance raises doubts about its value in terms of reducing information asymmetry and especially improving investors’ decision-making.

The present study represents the first evidence of the potential use of assurance for non-informative purposes. The authors provide clear evidence of how investors penalize managerial influence on assurance, in contrast to the mainstream literature, which shows that this practice always improves investors’ decision-making and is rewarded.

This chapter investigates whether core competence of managers and their expansive (vs. specialized) managerial style affects firms' innovative ability, capacity, and efficiency. Using exogenous CEO departures as a natural experiment, it establishes a causal link between managerial capability and innovation. Importantly, it reveals that firms with talented managers receive significantly more nonself citations; make significantly lower self-citations and lesser citations to the others, indicating novel and explorative innovation achievements. Also, managers with higher general (specialized) ability are cited more (less) by patents from a wider range of fields. Lastly, career concern is identified as a mechanism linking higher ability and innovation.

Evidence on whether firms with higher risk choose a more transparent or more opaque risk reporting strategy in their annual reports is mixed. A potential explanation is that firms choose an alternative reporting strategy to risk disclosure, namely income smoothing. The purpose of this paper is to investigate the association between both strategies in relation to firm risk levels.

The authors use a balanced sample of 74 non-financial UK firms from the FTSE100 index over the period 2005–2015, examining the association between firm risk measures and both risk disclosure and income smoothing using a seemingly unrelated regression methodology.

The authors find that firm financial risk measures are positively associated with both risk disclosure and income smoothing, implying a complementary association. Furthermore, non-risk-related factors are associated with both lower levels of risk disclosure and higher income smoothing, implying a substitutive effect.

The authors do not consider other factors such as managerial optimism, managerial financial incentives and analysts' earnings forecasts which might influence the association between risk disclosure and income smoothing, and hence, this may be a limitation of the current study.

These results are important to regulators, investors and boards of directors who are interested in understanding the alternative reporting strategies that managers select when faced with high risk. The findings signal a need for closer regulatory scrutiny on not only the level of risk disclosure but also the financial reporting choices.

The authors extend the literature on the reporting versus recognition decisions made by managers.

The purpose of this paper is to empirically analyze the effects of managerial overconfidence on debt maturity structure decisions in terms of liquidity risk and asset match in Chinese listed companies.

Combining data from CSMAR with some default data collected by hand, this paper selects age, tenure, education, education background and whether the board chair and CEO positions are consolidated in Chinese listed companies as proxies of managerial overconfidence. Thus, the authors acquired needed and credible empirical data.

It was found that, the younger the CEO, the shorter the tenure, the lower the education, having economics or management education and being chairman concurrently, CEOs have stronger managerial overconfidence. Thus, corporate debt maturity structure is more weakly correlated with debt ratio and asset structure.

The findings in this study suggest that managerial irrationality, especially overconfidence, does have an effect on the financing decisions of firms.

This is the first paper to analyze the effects of managerial overconfidence on debt maturity structure decisions in terms of liquidity risk and asset match. The findings inspire firm risk management policies from managerial overconfidence.

The aim of this paper is to analyze the impact of corporate governance (focused on some key mechanisms as board size, board independence, managerial ownership, institutional ownership, and chief executive officer duality) on financial analysts’ behavior in US. Results from panel data analysis for 294 US listed firms observed from 2007 to 2014 show that several attributes of the board of directors and audit committee have no effects on the number of analysts who are following the firm and the properties of analysts’ earnings forecasts. Findings also suggest that firms with independent and large boards and blockholders ownership benefit of more analyst following. In addition, it is proven that analysts’ earnings forecasts are optimistic and more accurate for companies where blockholder ownership, either by managers or external entities have larger quoted spreads but of lower quality for the ones which have greater independent board members and institutional investor’s holding.

This study intends to examine the impact of a fear of coronavirus disease 2019 (COVID-19) on workers' career optimism via perceived job insecurity among non-managerial working restaurant employees.

Time-lagged quantitative data were collected in two waves from 316 non-managerial on-job restaurant employees. Structural equation modeling technique was applied to examine the measurement and structural model.

The study showed that workers' fear of COVID-19 positively impacts their job insecurity. Further, the study found that increasing level of job insecurity depletes workers' career optimism—an outlook of their future career prospects.

The study suggests organizations should work to make employees feel secure in terms of their job continuity and career progression. Eventually, this would support employees in shielding themselves against possible resource loss (e.g. career optimism) due to pandemic crises.

Extant literature has tested the impact of the COVID-19 pandemic on employees' workplace attitudes and behaviors such as job satisfaction (e.g. Bajrami et al., 2021) and safety performance (e.g. Kim et al., 2021). However, little has been researched on the impact of the COVID-19 pandemic on employees' future career outlook, particularly of non-essential workers in the hospitality industry. To the best of the author's knowledge, an explicit examination of the impact of COVID-19 fear on career optimism has not been conducted previously. Hence, this study will not only be a valuable contribution in the literature of career management, but will also yield important practical implications.

This paper aims to evaluate the robustness of the listing effect in Australia, that is whether acquisitions of private firms create more value to the bidding firm’s shareholders than acquisitions of publicly listed firms.

The authors analyze the market reaction to the announcement of takeover bids initiated by Australian public firms on private and public targets over the period 1990-2011. The analysis controls for a wide range of bidder, deal and target country characteristics that are likely to correlate with the target’s listing status and acquirer abnormal returns. The authors also use a selection model to address the endogenous choice of the target’s listing status.

The results indicate that bidders experience significantly higher abnormal returns of about 1.7 per cent in the 11-day event window when the target is a private firm. The authors show that this result is broad-based and persistent. It does not appear to depend on whether the target is small or large; whether it is related or unrelated to the bidder’s industry; whether it is in the resources sector; and whether the transaction is domestic or cross-border. They find some evidence that bidder returns might be stronger for larger acquisitions, for unrelated targets, and in poor market conditions such as in the wake of the recent global financial crisis.

The research would benefit from the inclusion of the bidding firm’s ownership and governance characteristics.

The results support the view that market frictions contribute to make private firms attractive targets.

The analysis confirms the pervasiveness of the listing effect in a market characterized by a lesser degree of competition, higher search costs and the significance of the natural resources sector.