This research delves into the role of CEO overconfidence in shaping the performance of Indian companies. In addition, this study aims to provide an empirical analysis of how governance mechanisms influence the aforementioned relationship.
This research is carried out on S&P BSE 500 Indian firms over a time span of 12 years from 2010–2011 to 2020–2021.
Based on the empirical findings from panel regression analysis, the authors reveal that CEO overconfidence positively drives the financial and market performance of Indian firms in the long run. The study also uncovers that effective governance mechanisms strengthen the relationship between CEO confidence and firm performance by productively channeling top executives’ excesses for the benefit of the organization.
This study stands out by advancing the fields of strategic management, behavioral finance and corporate governance, providing novel insights into the dynamic relationship between behavioral attributes of top executives, governance and corporate performance in an emerging economy, that is, India. Moreover, this work uniquely integrates a comprehensive governance index as a moderating factor to understand the complex intricacies of the aforementioned relationship.
