This study aims to explore the relationship between chief executive officer (CEO) overconfidence and fintech innovation – a previously unexplored dynamic – focusing particularly on the mediating role of firm risk-taking behavior in Chinese A-share listed firms.
Using a sample of 9,441 firm-year observations, this study develops a detailed structural model based on upper echelons theory (UET). The research uses a range of sophisticated statistical techniques, including fixed effect regression, two-stage least square, two-step generalized method of moments, Heckman’s two-stage selection analysis and propensity score matching method, to produce robust results and account for potential endogeneity biases.
The results indicate that CEO overconfidence is positively linked to fintech innovation, with a stronger association in non-state-owned firms. Government control in state-owned firms may limit the CEO’s ability to pursue innovative and risky decisions. Firm risk-taking behavior partially mediates this relationship, as overconfident CEOs tend to invest more in R&D, prefer debt financing and maintain higher asset liquidity, driving fintech innovation.
To the best of the authors’ knowledge, no prior research has examined the empirical link between CEO overconfidence, firm risk-taking behavior and fintech innovation. It also expands on the UET by demonstrating how CEO traits influence strategic decisions and innovative outcomes. This research provides a fresh perspective on leadership and technological advancement within the context of Chinese firms.
