Eponymy family firms and optimistic forecasts

We explore optimism bias in management forecasts among eponymous firms—companies bearing the names of their controlling owners. Using a unique dataset from Israel, we show that eponymous firms systematically issue more optimistic cash flow forecasts than non-eponymous firms, a tendency not fully explained by rational incentives alone. This phenomenon, termed the “I Am The Firm” effect, arises from deep personal identification between owners and their companies. Our results remain robust in European settings, suggesting broad applicability. These findings illuminate the behavioral foundations of corporate forecasts, with implications for corporate governance, investors, and regulators.