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Objective: To analyze the impact of CEO overconfidence on firm value in companies listed on B3. Methodology/Approach: A quantitative and descriptive approach was used, based on non-financial companies listed on B3, observed over the period from 2010 to 2022. The proxy used for CEO overconfidence is overinvestment, obtained from the residuals of a regression of asset growth on sales. As for firm value, the proxies used were Market-to-Book and Tobin’s Q. The data were analyzed using panel data regression with unbalanced data and random effects. Relevance: Considering that some of the factors influencing firm value are not only presented in financial statements, but are also related to corporate aspects as well as the profile and characteristics of their investors and managers, this research aims to contribute to addressing this issue by seeking a better understanding of overconfidence and the potential prevention of its effects, especially regarding the frequent use of this cognitive bias in the decision-making process. Main Results: The results show that CEO overconfidence has a positive and significant influence on firm value. Based on the findings, it can also be inferred that companies whose CEOs exhibit a high level of overconfidence may prioritize profitability and use debt financing as a strategy to boost their operations. Theoretical Contributions: The findings of this study contribute to the literature by empirically confirming the relationship between CEO overconfidence and the market value of firms, which may support behavioral and psychological theories regarding the role of executives in making financial and strategic decisions. This strengthens the understanding of the influence of human behavior on corporate finance. Managerial Contributions: The study may also contribute to a better understanding of overconfidence as a psychological and behavioral phenomenon relevant to business performance, which can help identify its effects in different contexts and sectors, in addition to suggesting implications for management and corporate governance.

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When There is Too Much Confidence, Does the Market Price It in? Ceo Overconfidence and Market Value

  • 会议论文

  • 发表日期：

    2026年

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  • Clara Monise Silva,
  • Patrícia Pereira Castro,
  • Wenner Glaucio Lopes Lucena

摘要

Objective: To analyze the impact of CEO overconfidence on firm value in companies listed on B3. Methodology/Approach: A quantitative and descriptive approach was used, based on non-financial companies listed on B3, observed over the period from 2010 to 2022. The proxy used for CEO overconfidence is overinvestment, obtained from the residuals of a regression of asset growth on sales. As for firm value, the proxies used were Market-to-Book and Tobin’s Q. The data were analyzed using panel data regression with unbalanced data and random effects. Relevance: Considering that some of the factors influencing firm value are not only presented in financial statements, but are also related to corporate aspects as well as the profile and characteristics of their investors and managers, this research aims to contribute to addressing this issue by seeking a better understanding of overconfidence and the potential prevention of its effects, especially regarding the frequent use of this cognitive bias in the decision-making process. Main Results: The results show that CEO overconfidence has a positive and significant influence on firm value. Based on the findings, it can also be inferred that companies whose CEOs exhibit a high level of overconfidence may prioritize profitability and use debt financing as a strategy to boost their operations. Theoretical Contributions: The findings of this study contribute to the literature by empirically confirming the relationship between CEO overconfidence and the market value of firms, which may support behavioral and psychological theories regarding the role of executives in making financial and strategic decisions. This strengthens the understanding of the influence of human behavior on corporate finance. Managerial Contributions: The study may also contribute to a better understanding of overconfidence as a psychological and behavioral phenomenon relevant to business performance, which can help identify its effects in different contexts and sectors, in addition to suggesting implications for management and corporate governance.