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Does CEO overconfidence affect workplace safety?

Author

Listed:
  • Chen, Yangyang
  • Ofosu, Emmanuel
  • Veeraraghavan, Madhu
  • Zolotoy, Leon

Abstract

We study the impact of CEO overconfidence on workplace safety. We provide robust evidence of a positive relation between CEO overconfidence and workplace injury rates, implying that CEO overconfidence impairs workplace safety. In cross-sectional analysis, we find that the documented effect is amplified among firms with greater concentration of decision rights in headquarters and higher employee turnover, while is mitigated among firms with stronger labor union presence and more effective corporate governance mechanisms. Additional analysis points to increased employee workload and poor corporate safety culture as the mechanisms behind the documented detrimental effect of CEO overconfidence on workplace safety.

Suggested Citation

  • Chen, Yangyang & Ofosu, Emmanuel & Veeraraghavan, Madhu & Zolotoy, Leon, 2023. "Does CEO overconfidence affect workplace safety?," Journal of Corporate Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:corfin:v:82:y:2023:i:c:s0929119923000792
    DOI: 10.1016/j.jcorpfin.2023.102430
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    Citations

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    Cited by:

    1. Juwon Jang & Eunju Lee, 2024. "CEO confidence matters: the real effects of short sale constraints revisited," Review of Quantitative Finance and Accounting, Springer, vol. 62(2), pages 603-636, February.

    More about this item

    Keywords

    CEO overconfidence; Workplace safety; Injury rates;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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