Organization and Strategy Online Seminar（2020-01）

Topic: Overconfident CEOs in Dire Straits: How Incumbent and Successor CEO Overconfidence Affects Firm Turnaround Performance

Speaker: Yi Tang, the University of Hong Kong

Time: Friday, 10 April, 10:00-11:30 am

Location: Microsoft Teams Online conference room

Abstract:

Overconfidence, as a well-studied executive bias, is usually negatively connoted – even though ultimate empirical evidence of its performance effects remains scarce. Theorizing on the psychological and cognitive role of overconfidence, this study examines when and why the forces at work may lead to negative andpositiveeffects in a turnaround situation, where performance declines and the survival of the firm is threatened. We propose that CEO overconfidence can either help or hinder the turnaround, depending on whether it manifests in the incumbent or the successor CEO. Specifically, incumbent CEOs’ overconfidence has a negative effect on turnaround performance as resulting cognitive dissonance incapacitates them to recognize the need for action. In contrast, as overconfident successors hired in turnaround situations experience cognitive consonance and acknowledge the need for action, they pursue restructuring more assertively and are thus associated with superior turnaround performance, especially when they were hired from outside the focal firm’s industry. Analysing a panel dataset of 240 turnaround cases in S&P 1500 firms during 1992–2012 renders strong support to our predictions.

Introduction:

Yi Tang currently is an Associate Professor (with tenure) in Strategy in the Department of Management, Faculty of Business and Economics, University of Hong Kong. Previously, Dr. Tang was affiliated with Hong Kong Baptist University and Hong Kong Polytechnic University. Yi Tang received his PhD from Hong Kong University of Science and Technology (HKUST) in June, 2009.

Dr. Tang’s research and teaching interests reside in the areas of strategic leadership, firm innovation, corporate social responsibility, and interfirm social networks. His research output has been published in top-tier journals, including Academy of Management Journal, Strategic Management Journal, Journal of Management, among others. He is also a frequent contributor for Tsinghua Management Review (清华管理评论), a practitioner journal.

Dr. Tang currently sits on the editorial boards of Strategic Management Journal and Management and Organization Review. He is also editing special issues for Journal of Management Studies and Family Business Review. Dr. Tang is an active member of Academy of Management (AOM) and Strategic Management Society (SMS), and also serves as the representative-at-large for the International Association of Chinese Management Research (IACMR).

Dr. Tang has taught Strategic Management and its related subjects for the PhD, DBA MBA, MSc, and Undergraduate levels. For the past eight years, Dr. Tang has been responsible for the Strategic Management area in the DBA programs at Hong Kong Polytechnic University and Hong Kong Baptist University.

//www.fbe.hku.hk/people/academic/yi-tang

Your participation is warmly welcomed!