(Bob Staake for The Washington Post)

Most people believe confidence is an attribute in leaders. No one wants someone in charge who is submissive, fickle or fluctuating. But new research reminds us that when it comes to CEOs and mergers and acquisitions, there can also definitely be too much of a good thing.

The recent study, which is published in the Journal of Quantitative and Financial Analysis, finds that over-confident CEOs tend to make more offers to buy other companies, setting up more opportunities for a failed acquisition. They tend to go after companies that do not focus on their core line of business, a strategy that has been proven time and again to go wrong.

And particularly assertive CEOs are more likely to use cash to acquire a target company because they believe their own firm's stock price is undervalued, which can deplete financial resources. All that adds up to potentially risky propositions for investors, say the researchers, who are based at the University of Missouri, Georgia Institute of Technology and the University of Texas at Arlington.

To determine which CEOs were overconfident and which ones were not, the researchers looked at global news wires and global business publications over the study period and counted the number of times that words like "confident" and "optimistic" were used to describe the CEO, while also counting words like "conservative," "reliable" or "frugal" to decide who was not overly sure of their company's prospects. Those with the most references to confidence or optimism—and the fewest references to cautious humility—were deemed the most overconfident. (Prior studies have looked at how often managers held onto "in-the-money" stock options to judge overconfidence, but given the international nature of the data, the researchers had to resort to other ways to identify chutzpah.)

Who knows how much their results may have been swayed by particularly good (or bad) P.R. people, who may have had a hand in helping to portray a company leader to the press as either assertive or humble. And they're hardly the first to link humility with successful corporate performance. Anyone who's ever read Jim Collins' management classic Good to Great will recall how he applauds leaders who "never boast," shun "public adulation" and "look out the window, not in the mirror, to apportion credit for the success of the company." The best leaders, Collins writes, have a "paradoxical blend of personal humility and professional will."

Studies like this can feel like confirmations of common-sense ideas we already know. After all, what's so surprising about the idea that hotshot leaders who think too highly of themselves or their companies can get investors in trouble? Still, at a time when boards continue to overcompensate CEOs and the stock market continues to overreact to executive caution, it's interesting to see hard data that shows overconfidence can have worse consequences than just making the CEO an insufferable person to be around. All that hubris has a real impact on investors, too.

Jena McGregor is a columnist for On Leadership.

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