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The Effect Of Ceo Overconfidence On Firm’S Sustainable Management

Author

Listed:
  • Kyoungwon Mo

    (Chung-Ang University)

  • Soo Yeon Park

    (Chung-Ang University)

Abstract

This study examines whether CEO overconfidence would enhance capital expenditures, selling, general and administrative expenses, and corporate social responsibility (CSR) by preventing the CEO’s sunk-cost bias. Using data from publicly traded U.S. firms from 1992 to 2015, we find that CEO overconfidence is less influenced by the previous level of investment and leads to independent decision-making regarding expenditures and CSR. Moreover, we discovered that overconfident CEOs incur fewer expenditures by making an independent and sustainable judgment, not driven by sunk costs incurred in prior periods. We also found evidence that independent decision-making helps enable long-term sustainable management and decrease the cost burden that may arise from repeating and continuing previous CSR activities.

Suggested Citation

  • Kyoungwon Mo & Soo Yeon Park, 2021. "The Effect Of Ceo Overconfidence On Firm’S Sustainable Management," International Journal of Entrepreneurship, Allied Business Academies, vol. 25(3).
    • Handle: RePEc:ris:ijentr:0186
    as

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    More about this item

    Keywords

    CEO Overconfidence; Corporate Social Responsibility; Corporate Sustainability; Cost Stickiness; Inve;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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