Overconfidence Bias in Managers: Scale Development

Overconfidence bias, an increased confidence in the likelihood of outcomes, has gained importance in the management domain since the research body has documented well that the overconfident managers are more likely to think optimistically and to underestimate the risks.Therefore, this project aims to explore whether this bias, if it exists in the managers, has a relation with their firm's financial reporting quality which is an output of their decision-making process. For this purpose, we will conduct a survey in order to operationalize the overconfidence construct, and therefore we will conduct interviews with the middle and top level managers. In order to measure financial reporting quality of the firms, we will employ primary data, namely the financial statements of the firms. In this project, the students will experience how the primary data (i.e., financial statements) and the secondary data (i.e., survey study) could be used to carry out an empirical research.