Governance beyond borders: exploring executive overconfidence and firm performance using meta-analysis

Abstract

Purpose: This study examines the complex relationship between executive overconfidence and firm performance, highlighting the moderating role of country-level factors. By conducting a meta-analysis of 116 independent effect sizes from global studies, this research aims to clarify the ambiguous effects of executive overconfidence, emphasizing the significance of national contexts. Design/methodology/approach: Utilizing a cross-national meta-analytic framework, this study evaluates how variations in governance, board efficacy and shareholder protection across countries influence the impact of executive overconfidence on firm performance. Findings: Results reveal that the relationship between executive overconfidence and performance is significantly shaped by country-level factors, suggesting a need to consider contextual influences alongside traditional trait-focused perspectives and underscoring the importance of contextual influences. Practical implications: The findings suggest that organizations should incorporate national-level contextual factors in their governance structures to better manage the risks associated with executive overconfidence. Originality/value: This study advances the literature by providing a comprehensive analysis of how country-specific variables modulate the effects of executive overconfidence on firm outcomes. It offers new insights into the role of situational factors in executive behavior, contributing to a more nuanced understanding of leadership and organizational performance.