Are Overconfident CEOs Better Innovators?

Previous empirical work on adverse consequences of CEO overconfidence raises the question of why firms would hire overconfident managers. Theoretical research suggests a reason, that overconfidence can sometimes benefit shareholders by increasing investment in risky projects. Using options- and press-based proxies for CEO overconfidence, we find that over the 1993-2003 period, firms with overconfident CEOs have greater return volatility, invest more in innovation, obtain more patents and patent citations, and achieve greater innovative success for given research and development (R&D) expenditure. Overconfident managers only achieve greater innovation than non-overconfident managers in innovative industries. Our findings suggest that overconfidence may help CEOs exploit innovative growth opportunities.Presentation slides at https://ssrn.com/abstract=3190958.

PROJECT RISK EVALUATION BY USING A NEW FUZZY MODEL BASED ON ELENA GUIDELINE

The complexity and dynamics of the executive projects have coped contractors with substantial hazards and losses. Project risk management is a critical tool for authority to improve its performance and secure the success of the organization. However, a number of standards and approaches have been developed to formulate the projects based on their risks. The Elena guideline is a systematic standard developed by Iran Project Management Association. This guideline provides the full cycle of the risk management process. Risk evaluation is the key part of the risk management process. On the other hand, different techniques have been developed to model a risk evaluation problem. Fuzzy inference system is one of the most popular techniques that is capable of handling all types of the uncertainty involved in projects. This paper proposes a three-stage approach based on the fuzzy inference system under the environment of the Elena guideline to cope with the risky projects. Finally, an illustrative example of the risk evaluation is presented to demonstrate the potential application of the proposed model. The results show that the proposed model evaluates the risky projects efficiently and effectively.

Using Satisfaction Ratings to Minimize Risk

Warranties in the construction industry have become more prevalent in the last couple of decades. Moreover buyers in the construction industry rely heavily on the length of the warranties for the purchase of any product or service. The warranty is an agreement between the buyer and the manufacturer and has inclusions that if altered voids the warranty. Hence the length of the warranty has no correlation to the actual performance of the product or service being purchased. One of the manufacturers in the construction industry, in order to differentiate themselves from other manufacturers, approached the researchers to implement a system that can better assist and serve their end users beyond just providing a warranty. The purpose of this paper is to describe and analyse the warranty tracking program that tracks the installed roofing projects for the manufacturers providing an overall snapshot of the performance of all the installed projects. The warranty tracking program provides the manufacturer the risky projects (leaks, blisters, end-user dissatisfied) with the use of end-user customer satisfaction every year. The researchers also implemented the high performance roofing program and a performance-based licensure process to attract high performing applicators. Since the inception of the warranty tracking program the manufacturer has been able to resolve 69 out of 70 (98%) risky projects. In conclusion, the warranty tracking program provided the manufacturer a better way to assist and serve their end users through proactive resolution of risky projects.