Corporate Governance and Managerial Overconfidence

Abstract

This chapter draws attention to the fact that corporate governance can help in moderating overconfidence, particularly in corporate strategic decisions. CEOs with overconfidence are more likely to engage in risky investment. Agency theory does endorse performance-related pay and independent directors. The Sarbanes-Oxley Act and gender diversity are cited as useful for maintaining an equitable decision-making system. However, a great void persists within the landscape of bibliometric analyses in this area. With the R studio program and the PRISMA procedure, this study makes a critical literature review on overconfidence and corporate governance. Through an exhaustive review of 283 papers on the Web of Science (WOS) and Scopus, this study summarizes major themes, principal authors, and key gaps in the field of overconfidence and strategic decision-making. This is the reason why this chapter aims at assessing the nature of the relationship between overconfidence and corporate innovation, R&D, financial and investment, acquisition decisions, and CSR, and calling for improved governance solutions, multidisciplinary research, and stakeholders' involvement.