CEO Overconfidence and Corporate Investment: Moderating Role of Corporate Governance Practices

Abstract

This paper examines the relationship between CEO overconfidence, corporate investment and firm performance along with moderating effect of corporate governance (CG) between them. We collected the data of Pakistani listed firms from 2010-2018. The findings suggest that the relationship between CEO overconfidence and corporate investment is significant and the corporate governance also moderates the relationship of CEO overconfidence and corporate performance. In addition, the authors report a significant substantial relationship exists between Tobin’s Q and CEO overconfidence and between ROA and CEO overconfidence. The moderator effect is also significant in the case of CEO overconfidence and Tobin’s Q, and in case of ROA and CEO overconfidence. This is the first empirical paper on CEO overconfidence, corporate investment and governance practices using data for the Pakistan.