ABSTRACT This study examines the performance target response to CEO overconfidence. Using unique hand-collected data on the annual bonus targets of Standard & Poor’s (S&P) 1500 firms, we find that boards ratchet targets more aggressively and apply greater ratcheting asymmetry for overconfident CEOs than for non-overconfident CEOs. These findings are robust to a battery of sensitivity tests. We also provide evidence that the increase in target ratcheting for overconfident CEOs is particularly more pronounced in firms with strong monitoring environments. Collectively, our findings suggest that boards actively consider CEOs’ overconfidence when setting performance targets, providing new insight into the importance of CEOs’ personal traits with respect to the incentive effects of performance target revisions. JEL Classification: G34; J33; M52.

中文翻译：

---

首席执行官过度自信和奖金目标棘轮


摘要本研究探讨了绩效目标对首席执行官过度自信的反应。利用手工收集的有关标准普尔 (S&P) 1500 家公司年度奖金目标的独特数据，我们发现，与非过度自信的首席执行官相比，董事会对过度自信的首席执行官设定的目标更加积极，并且采用更大的棘轮不对称性。这些发现对于一系列敏感性测试来说是稳健的。我们还提供证据表明，在拥有强大监控环境的公司中，过度自信的首席执行官的目标棘轮的增加尤其明显。总的来说，我们的研究结果表明，董事会在设定绩效目标时积极考虑首席执行官的过度自信，为首席执行官个人特质对于绩效目标修订的激励效果的重要性提供了新的见解。 JEL分类：G34； J33； M52。