Time evolution of CEO overconfidence

Using a sample of publicly-traded companies in the United States from 2006 to 2024, we study the evolution of CEO overconfidence over time based on the Holder67 index of option exercise structure. Overconfidence first dipped and then went up after 2008 and started reverting after 2020. 2SLS with the lag real value as the tool variable provides evidence consistent with an ‘option value → overconfidence’ channel. Survival analysis shows that the degree of real value accelerates the exercise of power, slows down the exercise of leverage, and delays the exercise of power in crisis. The triple difference reveals the layered interaction of “crisis × industry exposure × incentive intensity”: single-dimension magnifies confidence, while the superposition of the three creates checks and balances. In terms of heterogeneity, enterprises with medium financing constraints and high R&D have the strongest response, while enterprises with low R&D have more moderate response. Results indicate that in crisis, incentive design needs to be coordinated with risk exposure and external constraints together with implementation of differentiated governance.