Entrepreneurship: cause and consequence of financial optimism

Dawson, Christopher, de Meza, David, Henley, Andrew ORCID: https://orcid.org/0000-0003-4057-1679 and Arabsheibani, G. Reza 2014. Entrepreneurship: cause and consequence of financial optimism. Journal of Economics & Management Strategy 23 (4) , pp. 717-742. 10.1111/jems.12076

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Abstract

Extant evidence that the self‐employed overestimate their returns by a greater margin than employees is consistent with two mutually inclusive possibilities. Self‐employment may foster optimism or intrinsic optimists may be drawn to self‐employment. Previous research is generally unable to disentangle these effects because of reliance on cross‐sectional data. Using longitudinal data, this paper finds that employees who will be self‐employed in the future overestimate their short‐term financial wellbeing by more than those who never become self‐employed. Optimism is higher still when self‐employed. These results suggest that the greater optimism of the self‐employed reflects both psychological disposition and environmental factors. By providing greater scope for optimism, self‐employment entices the intrinsically optimistic.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Additional Information:	PDF uploaded in accordance with Publisher's polices at http://www.sherpa.ac.uk/romeo/issn/1058-6407/ (accessed 9.9.16).
Publisher:	Wiley Blackwell
ISSN:	1058-6407
Date of First Compliant Deposit:	9 September 2016
Last Modified:	15 Nov 2024 14:30
URI:	https://orca.cardiff.ac.uk/id/eprint/93474

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