The sandwich game: Founder-CEOs and forecasting as impression management

Drawing on impression management and social exchange theory, we examine the use of positively biased forecasts by (non-)founder-CEOs as an impression management tactic vis-a-vis their existing investors. Contrary to their non-founder counterparts, founder-CEOs identify more with the venture they founded and, therefore, experience greater instrumental and affective concerns about the long-term relationship with their investors. Consequently, we hypothesize that founder-CEOs will strategically provide less positively biased forecasts to their investors than non-founder-CEOs. Using two independent samples with revenue forecasts reported to different venture capital investors and a causal chain scenario study consisting of two experiments, we find consistent support for our hypothesis. Overall, this study provides new insights into the use of forecasts as a post-investment impression management tactic by distinct types of CEOs in entrepreneurial ventures.

Automated summary

Drawing on impression management and social exchange theory, this study examines the use of positively biased forecasts by founder-CEOs and non-founder-CEOs as an impression management tactic. The results suggest that founder-CEOs, who have a stronger identification with their ventures, strategically provide less positively biased forecasts to their investors compared to non-founder-CEOs.