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Entrepreneurship: cause and consequence of financial optimism

Dawson, Christopher, de Meza, David, Henley, Andrew and Arabsheibani, G. Reza (2014) Entrepreneurship: cause and consequence of financial optimism. Journal of Economics and Management Strategy, 23 (4). pp. 717-742. ISSN 1058-6407

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Identification Number: 10.1111/jems.12076

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
Official URL: http://onlinelibrary.wiley.com/
Additional Information: © 2014 Wiley Periodicals, Inc.
Divisions: Management
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Management
Date Deposited: 08 Feb 2016 12:42
Last Modified: 20 Jun 2020 01:55
URI: http://eprints.lse.ac.uk/id/eprint/65276

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