Entrepreneurship: Cause and Consequence of Financial Optimism

Dawson, Christopher; de Meza, David; Henley, Andrew; Arabsheibani, G. Reza

Abstract

© 2014 Wiley Periodicals, Inc. 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.

• Journal Article Type: Article
• Publication Date: Jan 1, 2014
• Publicly Available Date: Jun 6, 2019
• Journal: Journal of Economics and Management Strategy
• Print ISSN: 1058-6407
• Electronic ISSN: 1530-9134
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 23
• Issue: 4
• Pages: 717-742
• DOI: https://doi.org/10.1111/jems.12076
• Keywords: economics, entrepreneurship, financial optimism
• Public URL: https://uwe-repository.worktribe.com/output/807051
• Publisher URL: http://dx.doi.org/10.1111/jems.12076
• Additional Information: Additional Information : This is the pre-peer reviewed version of the following article: Dawson, C., de Meza, D., Henley, A. and Arabsheibani, G. R. (2014) Entrepreneurship: Cause and consequence of financial optimism. Journal of Economics and Management Strategy, 23 (4). pp. 717-742. ISSN 1058-6407, which has been published in final form at http://dx.doi.org/10.1111/jems.12076