Unravelling the Impact of Executive Confidence on Firm Profitability

IF 2.3 Q3 BUSINESS

Global Business Review Pub Date : 2024-03-22 DOI:10.1177/09721509241225334

Diksha Saini, Balwinder Singh

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引用次数: 0

Abstract

The focus of this research is on the Upper Echelon Theory, asserting that CEO&’s cognitive attributes exert a major effect on organizational outcomes. The present study adds to the behavioural finance and strategic management literature by investigating the association between Chief Executive Officer&’s (CEO) confidence and firm profitability in the Indian context. A sample of S&P BSE 100 Indian firms for five financial years has been used to examine the aforementioned relationship, using panel regression analysis. The findings reveal that CEO overconfidence favourably impacts the company&’s profitability as overconfident CEOs enjoy the early mover advantage in the market through quick and innovative decisions and gain competitive strength by overinvesting in good but risky projects. These findings contribute novel insights to the existing literature by exploring the most prevalent managerial behavioural bias and its impact on corporate profitability in the Indian context. The analysis may assist the policymakers responsible for framing recruitment and compensation policies and developing an optimum monitoring system to capitalize on the cognitive traits of top executives in India.

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解读高管信心对企业盈利能力的影响

本研究的重点是 "上层理论"，该理论认为首席执行官的认知特质对组织结果有重大影响。本研究通过调查印度首席执行官（CEO）的信心与公司盈利能力之间的关系，为行为金融学和战略管理文献添砖加瓦。本研究采用面板回归分析法，以印度 S&P BSE 100 家公司五个财务年度的数据为样本，对上述关系进行了研究。研究结果表明，首席执行官的过度自信会对公司的盈利能力产生有利影响，因为过度自信的首席执行官通过快速和创新的决策在市场上享有先发优势，并通过过度投资于好的但有风险的项目获得竞争实力。这些研究结果探讨了印度最普遍的管理行为偏差及其对企业盈利能力的影响，为现有文献提供了新的见解。这些分析可能有助于负责制定招聘和薪酬政策的决策者，并有助于开发最佳监督系统，以利用印度高层管理人员的认知特征。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Global Business Review BUSINESS-

CiteScore

7.10

自引率

12.50%

发文量

107

期刊介绍： Global Business Review is designed to be a forum for the wider dissemination of current management and business practice and research drawn from around the globe but with an emphasis on Asian and Indian perspectives. An important feature is its cross-cultural and comparative approach. Multidisciplinary in nature and with a strong practical orientation, this refereed journal publishes surveys relating to and report significant developments in management practice drawn from business/commerce, the public and the private sector, and non-profit organisations. The journal also publishes articles which provide practical insights on doing business in India/Asia from local and global and macro and micro perspectives.