Drawing on upper echelons theory and stakeholder theory, this study examines the relationship between CEO overconfidence and CSR engagement. It is argued that CEOs with varying levels of overconfidence differ in motivation and approaches to CSR engagement. Both less and more overconfident CEOs have distinct reasons to engage in different CSR activities. Such complexity implies that the relationship between CEO overconfidence and CSR engagement may not be linear but curvilinear. Accordingly, a U-shaped relationship between CEO overconfidence and CSR engagement is proposed. Results of fixed-effect regression analysis using an unbalanced panel of 21,034 firm-year observations representing 2,223 unique U.S. firms support our hypothesis. This study contributes to the emerging body of literature on the effects of CEO characteristics on CSR policies and performance, enhancing our understanding of the driving forces behind firms’ CSR engagement.
AhmedADuellmanS (2013) Managerial overconfidence and accounting conservatism. Journal of Accounting Research51(1): 1–30.
2.
Al-ShammariMRasheedAAl-ShammariHA (2019) CEO narcissism and corporate social responsibility: does CEO narcissism affect CSR focus?Journal of Business Research104: 106–117.
3.
ArenaCMichelonGTrojanowskiG (2018) Big egos can be green. British Journal of Management29(2): 316–336.
4.
BanerjeeSHumphery-JennerMNandaV (2015) Restraining overconfident CEOs through improved governance: evidence from the Sarbanes-Oxley Act. Review of Financial Studies28(10): 2812–2858.
5.
BanerjeeSDaiLHumphery-JennerM, et al. (2020) Covernance, board inattention, and the appointment of overconfident CEOs. Journal of Banking & Finance113: 105733.
6.
BarneaARubinA (2010) Corporate social responsibility as a conflict between shareholders. Journal of Business Ethics97: 71–86.
7.
BasuKPalazzoG (2008) Corporate social responsibility: a process model of sensemaking. Academy of Management Review33(1): 122–136.
8.
Ben-DavidIGrahamJHarveyC (2013) Managerial miscalibration. Quarterly Journal of Economics128(4): 1547–1584.
9.
BergstresserDPhilipponT (2006) CEO incentives and earnings management. Journal of Financial Economics80(3): 511–529.
10.
BerryTCJunkusJC (2013) Socially responsible investing: an investor perspective. Journal of Business Ethics112: 707–720.
11.
BhandariLC (1988) Debt/equity ratio and expected common stock returns: empirical evidence. The Journal of Finance43(2): 507–528.
12.
BhattacharyaCBSenSKorschunD (2008) Using corporate social responsibility to win the war for talent. MIT Sloan management review49(2): 37–44.
13.
BouslahKKryzanowskiLM’ZaliB (2013) The impact of the dimensions of social performance on firm risk. Journal of Banking & Finance37(4): 1258–1273.
14.
BrocknerJ (1992) The escalation of commitment to a failing course of action: toward theoretical progress. Academy of Management Review17(1): 39–61.
15.
BrownJAForsterWR (2013) CSR and stakeholder theory: a tale of Adam Smith. Journal of Business Ethics112: 301–312.
16.
BrownRSarmaN (2007) CEO overconfidence, CEO dominance and corporate acquisitions. Journal of Economics and Business59(5): 358–379.
17.
BurkhardBSirénCvan EssenM, et al. (2023) Nothing ventured, nothing gained: a meta-analysis of CEO overconfidence, strategic risk taking, and performance. Journal of Management49(8): 2629–2666.
18.
BusenitzLBarneyJ (1997) Differences between entrepreneurs and managers in large organizations: biases and heuristics in strategic decision-making. Journal of Business Venturing12: 9–30.
19.
CamererCLovalloD (1999) Overconfidence and excess entry: an experimental approach. The American Economic Review89: 306–318.
20.
CampbellJL (2007) Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review32(3): 946–967.
21.
CampbellTCGallmeyerMJohnsonSA, et al. (2011) CEO optimism and forced turnover. Journal of Financial Economics101: 695–712.
22.
CarrollAB (1991) The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Business Horizons34: 39–48.
23.
CespaGCestoneG (2007) Corporate social responsibility and managerial entrenchment. Journal of Economics and Management Strategy16: 741–771.
24.
ChenGCrosslandCLuoS (2015) Making the same mistake all over again: CEO overconfidence and corporate resistance to corrective feedback. Strategic Management Journal36(10): 1513–1535.
25.
ChenWZhouGZhuX (2019) CEO tenure and corporate social responsibility performance. Journal of Business Research95: 292–302.
26.
ChenRCHungSWWeiYC (2022) CEO overconfidence and CSR engagement. Review of Pacific Basin Financial Markets and Policies25(4): 2250025.
27.
ChinMKHambrickDCTreviñoLK (2013) Political ideologies of CEOs: the influence of executives’ values on corporate social responsibility. Administrative Science Quarterly58: 197–232.
28.
ChoiJWangH (2009) Stakeholder relations and the persistence of corporate financial performance. Strategic Management Journal30(8): 895–907.
29.
CroninMAStoutenJVan KnippenbergD (2021) The theory crisis in management research: solving the right problem. Academy of Management Review46(4): 667–683.
30.
CroninMAStoutenJVan KnippenbergD (2022) Why theory on “how theory fits together” benefits management scholarship. Academy of Management Review47(2): 333–337.
31.
De SilvaKMDe Silva LokuwadugeCS (2021) Impact of corporate social responsibility practices on employee commitment. Social Responsibility Journal17(1): 1–14.
32.
DeckopJRMerrimanKKGuptaS (2006) The effects of CEO pay structure on corporate social performance. Journal of Management32(3): 329–342.
33.
DmytriyevSDFreemanREHörischJ (2021) The relationship between stakeholder theory and corporate social responsibility: differences, similarities, and implications for social issues in management. Journal of Management Studies58(6): 1441–1470.
34.
DonaldsonT (1999) Making stakeholder theory whole. Academy of Management Review24(2): 237–241.
35.
DuellmanSHurwitzHSunY (2015) Managerial overconfidence and audit fees. Journal of Contemporary Accounting and Economics11: 148–165.
36.
DurandRPaugamLStolowyH (2019) Do investors actually value sustainability indices? Replication, development, and new evidence on CSR visibility. Strategic Management Journal40(9): 1471–1490.
37.
EngelenANeumannCSchwensC (2015) “Of course I can”: the effect of CEO overconfidence on entrepreneurially oriented firms. Entrepreneurship Theory and Practice39: 1137–1160.
38.
FlammerC (2014) Does product market competition foster corporate social responsibility? Evidence from trade liberalization. Strategic Management Journal36(10): 1469–1485.
39.
FombrunCJGardbergNABarnettML (2000) Opportunity platforms and safety nets: corporate citizenship and reputational risk. Business and Society Review105(1): 85–106.
40.
FreemanRE (1984) Strategic Management: A Stakeholder Approach. Boston, MA: Pitman.
41.
FreemanREHarrisonJWicksA (2007) Managing for Stakeholders: Survival Reputation, and Success. New Haven, CT: Yale University Press.
42.
FreemanREHarrisonJSWicksAC, et al. (2010). Stakeholder theory: the state of the art.
43.
FuRTangYChenG (2020) Chief sustainability officers and corporate social (Ir) responsibility. Strategic Management Journal41(4): 656–680.
44.
GalassoASimcoeTS (2011) CEO overconfidence and innovation. Management Science57(8): 1469–1484.
45.
GaoYHanKS (2022) Managerial overconfidence, CSR and firm value. Asia-Pacific Journal of Accounting & Economics29(6): 1600–1618.
46.
GlassCCookAIngersollAR (2016) Do women leaders promote sustainability?Business Strategy and the Environment25(7): 495–511.
47.
GoelAMThakorAV (2008) Overconfidence, CEO selection, and corporate governance. The Journal of Finance63(6): 2737–2784.
48.
GreeningDWTurbanDB (2000) Corporate social performance as a competitive advantage in attracting a quality workforce. Business & Society39: 254–280.
49.
GriffinJJMahonJE (1997) The corporate social performance and corporate financial performance debate: twenty-five years of incomparable research. Business & Society36: 5–31.
50.
GuptaABriscoeFHambrickDC (2017) Red, blue, and purple firms: organizational political ideology and corporate social responsibility. Strategic Management Journal38: 1018–1040.
51.
GuptaANadkarniSMariamM (2019) Dispositional sources of managerial discretion: CEO ideology, CEO personality, and firm strategies. Administrative Science Quarterly64(4): 855–893.
52.
GuptaAFungAMurphyC (2021) Out of character: CEO political ideology, peer influence, and adoption of CSR executive position by Fortune 500 firms. Strategic Management Journal42(3): 529–557.
53.
HaansRFJPietersCHeZ (2016) Thinking about U: theorizing and testing U- and inverted U-shaped relationships in strategy research. Strategic Management Journal37: 1177–1195.
54.
HambrickDCMasonP (1984) Upper echelons: the organization as a reflection of its top managers. Academy of Management Review9: 193–206.
55.
HaywardMLAHambrickDC (1997) Explaining the premiums paid for large acquisitions: evidence of CEO hubris. Administrative Science Quarterly42(1): 103–127.
56.
HaywardMLARindovaVPPollockTG (2004) Believing one’s own press: the causes and consequences of CEO celebrity. Strategic Management Journal25: 637–653.
57.
HaywardMLAShepherdDAGriffinD (2006) A hubris theory of entrepreneurship. Management Science52(2): 160–172.
58.
HeaveyCSimsekZFoxBC, et al. (2022) Executive confidence: a multidisciplinary review, synthesis, and agenda for future research. Journal of Management48: 1430–1468.
59.
HedgeSPMishraDR (2019) Married CEOs and corporate social responsibility. Journal of Corporate Finance58: 226–246.
60.
HillerNHambrickD (2005) Conceptualizing executive hubris: the role of (hyper-) core self-evaluations in strategic decision-making. Strategic Management Journal26: 297–319.
61.
HirshleiferDLowATeohSH (2012) Are overconfident CEOs better innovators?The Journal of Finance67(4): 1457–1498.
62.
HongBLiZMinorD (2016) Corporate governance and executive compensation for corporate social responsibility. Journal of Business Ethics136: 199–213.
63.
HrazdilKMahmoudianFNazariJA (2021) Executive personality and sustainability: do extraverted chief executive officers improve corporate social responsibility?Corporate Social Responsibility and Environmental Management28: 1564–1578.
64.
HribarPYangHI (2016) CEO overconfidence and management forecasting. Contemporary Accounting Research33(1): 204–227.
65.
HubbardTDChristensenDMGraffinSD (2017) Higher highs and lower lows: the role of corporate social responsibility in CEO dismissal. Strategic Management Journal38: 2255–2265.
66.
HullCERothenbergS (2008) Firm performance: the interactions of corporate social performance with innovation and industry differentiation. Strategic Management Journal29(7): 781–789.
67.
IqbalNAhmadNBasheerNANadeemM (2012) Impact of corporate social responsibility on financial performance of corporations: Evidence from Pakistan. International journal of learning and development2(6): 107–118.
68.
KimSLeeGKangH-G (2021) Risk management and corporate social responsibility. Strategic Management Journal42(1): 202–230.
69.
KingBG (2008) A political mediation model of corporate response to social movement activism. Administrative Science Quarterly53: 395–421.
70.
KlaymanJSollJBGonzalez-VallejoC, et al. (1999) Overconfidence: it depends on how, what, and whom you ask. Organizational Behavior and Human Decision Processes79(3): 216–247.
71.
KolasinskiACLiX (2013) Can strong boards and trading their own firm’s stock help CEOs make better decisions? Evidence from acquisitions by Overconfident CEOs. Journal of Financial and Quantitative Analysis48(4): 1173–1206.
72.
LeeJKimE (2021) Would overconfident CEOs engage more in environment, social, and governance investments? With a focus on female representation on boards. Sustainability13(6): 3373.
73.
LeeJMHwangB-HChenH (2017) Are founder CEOs more overconfident than professional CEOs? Evidence from S&P 1500 companies. Strategic Management Journal38: 751–769.
74.
LeeY-CLuY-CWangY-C (2018) Corporate social responsibility, CEO overconfidence, and stock price crash risk. Applied Economics Letters26(14): 1143–1147.
75.
LevBPetrovitsCRadhakrishnanS (2010) Is doing good good for you? How corporate charitable contributions enhance revenue growth. Strategic Management Journal31: 182–200.
76.
LewisBWWallsJLDowellGWS (2014) Difference in degrees: CEO characteristics and firm environmental disclosure. Strategic Management Journal35(5): 712–722.
77.
LibbyRRennekampK (2012) Self-serving attribution bias, overconfidence, and the issuance of management forecasts. Journal of Accounting Research50(1): 197–231.
78.
MalmendierUTateG (2005) CEO overconfidence and corporate investment. The Journal of Finance60: 2661–2700.
79.
MalmendierUTateG (2008) Who makes acquisitions? CEO overconfidence and the market’s reaction. Journal of Financial Economics89: 20–43.
80.
MaonFLindgreeASwaenV (2010) Organizational stages and cultural phases: a critical review and a consolidative model of corporate social responsibility development. International Journal of Management Reviews12(1): 20–38.
81.
MargolisJDElfenbeinHAWalshJP (2009) Does it pay to be good … and does it matter? A meta-analysis of the relationship between corporate social and financial performance. Available at SSRN: https://ssrn.com/abstract=1866371
82.
McCarthySOliverBSongS (2017) Corporate social responsibility and CEO confidence. Journal of Banking & Finance75: 280–291.
83.
McGuireJDowSArgheydK (2003) CEO incentives and corporate social performance. Journal of Business Ethics45: 341–359.
84.
McWilliamsASiegelD (2000) Corporate social responsibility and financial performance: correlation or misspecification?Strategic Management Journal21(5): 603–609.
85.
McWilliamsASiegelD (2011) Creating and capturing value: strategic corporate social responsibility, resource-based theory, and sustainable competitive advantage. Journal of Management37(5): 1480–1495.
86.
MerkleCWeberM (2011) True overconfidence: the inability of rational information processing to account for apparent overconfidence. Organizational Behavior and Human Decision Processes116(2): 262–271.
87.
MooreDAHealyPJ (2008) The trouble with overconfidence. Psychological Review115(2): 502–517.
88.
MoosaIARamiahV (2017) Overconfidence and self-serving bias. In: The Financial Consequences of Behavioural Biases. Palgrave Macmillan: Springer International Publishing, 45–69.
89.
NavisCOzbekOV (2016) The right people in the wrong places: the paradox of entrepreneurial entry and successful opportunity realization. Academy of Management Review41: 109–129.
90.
NyilasyGGangadharbatlaHPaladinoA (2014) Perceived greenwashing: the interactive effects of green advertising and corporate environmental performance on consumer reactions. Journal of Business Ethics125(4): 693–707.
91.
OhW-YChangYKChengZ (2016) When CEO career horizon problems matter for corporate social responsibility: the moderating roles of industry-level discretion and blockholder ownership. Journal of Business Ethics133: 279–291.
92.
ParkJKimCChangY, et al. (2018) CEO hubris and firm performance: exploring the moderating roles of CEO power and board vigilance. Journal of Business Ethics147: 919–933.
93.
PavićevićSKeilT (2021) The role of procedural rationality in debiasing acquisition decisions of overconfident CEOs. Strategic Management Journal42: 1696–1715.
94.
PérezARodríguez del BosqueI (2015) An integrative framework to understand how CSR affects customer loyalty through identification, emotions and satisfaction. Journal of Business Ethics129: 571–584.
95.
PetrenkoOVAimeFRidgeJ, et al. (2016) Corporate social responsibility or CEO narcissism? CSR motivations and organizational performance. Strategic Management Journal37: 262–279.
96.
PhuaKThamTMWeiC (2018) Are overconfident CEOs better leaders? Evidence from stakeholder commitments. Journal of Financial Economics127(3): 519–545.
97.
PorterMKramerM (2006) The link between competitive advantage and corporate social responsibility. Harvard Business Review84(12): 78–92.
98.
ReimerRDoornSHeydenM (2018) Unpacking functional experience complementarities in senior leaders’ influences on CSR strategy: a CEO – top management team approach. Journal of Business Ethics151(4): 977–995.
99.
ReyesTVassoloRSKauselEE, et al. (2022) Does overconfidence pay off when things go well? CEO overconfidence, firm performance, and the business cycle. Strategic Organization20(3): 510–540.
SchumacherCKeckSTangW (2020) Biased interpretation of performance feedback: the role of CEO overconfidence. Strategic Management Journal41: 1139–1165.
102.
ShiuY-MYangS-L (2017) Does engagement in corporate social responsibility provide strategic insurance-like effects?Strategic Management Journal38(2): 455–470.
103.
SimonMHoughtonSM (2003) The relationship between overconfidence and the introduction of risky products: evidence from a filed study. Academy of Management Journal46(2): 139–149.
104.
SparkesRCowtonCJ (2004) The maturing of socially responsible investment: a review of the developing link with corporate social responsibility. Journal of Business Ethics52: 5–57.
105.
SpectorPE (1988) Development of the work locus of control scale. Journal of Occupational Psychology61(4): 335–340.
106.
TangYQianCChenG, et al. (2015) How CEO hubris affects corporate social (ir)responsibility. Strategic Management Journal36: 1338–1357.
107.
TangYMackDZChenG (2018) The differential effects of CEO narcissism and hubris on corporate social responsibility. Strategic Management Journal39: 1370–1387.
108.
TaylorSBrownJD (1988) Illusion and well-being: a social psychological perspective on mental health. Psychological Bulletin103(2): 193–210.
109.
TetlockPE (2000) Cognitive biases and organizational correctives: do both disease and cure depend on the politics of the beholder?Administrative Science Quarterly45: 293–326.
110.
VelteP (2020) Do CEO incentives and characteristics influence corporate social responsibility (CSR) and vice versa? A literature review. Social Responsibility Journal16(8): 1293–1323.
111.
VolkSKöhlerTPudelkoM (2014) Brain drain: the cognitive neuroscience of foreign language processing in multinational corporations. Journal of International Business Studies45: 862–885.
112.
WaddockSAGravesS (1997) The corporate social performance-financial performance link. Strategic Management Journal18(4): 303–317.
113.
WaldmanDASiegelDSJavidanM (2006) Components of CEO transformational leadership and corporate social responsibility. Journal of Management Studies43(8): 1703–1725.
114.
WangGHolmesJ, RMOhI-S, et al. (2016) Do CEOs matter to firm strategic actions and firm performance? A meta-analytic investigation based on upper echelons theory. Personnel Psychology69: 775–862.
115.
ZhangHOuAYTsuiAS, et al. (2017) CEO Humility, narcissism and firm innovation: a paradox perspective on CEO traits. The Leadership Quarterly28(5): 585–604.
116.
ZhuDHChenG (2015) Narcissism, director selection, and risk-taking spending. Strategic Management Journal36(13): 2075–2098.
117.
ZribiWBoufatehT (2020) Asymmetric CEO confidence and CSR: a nonlinear panel ARDL-PMG approach. The Journal of Economic Asymmetries22: e00176.
