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.

中文翻译：

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揭示高管信心对公司盈利能力的影响

这项研究的重点是上层梯队理论，该理论认为首席执行官的认知属性对组织结果产生重大影响。本研究通过调查印度背景下首席执行官 (CEO) 信心与公司盈利能力之间的关联，对行为金融学和战略管理文献进行了补充。使用面板回归分析，以 S&P BSE 100 印度公司五个财政年度的样本来检验上述关系。研究结果表明，首席执行官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享有市场先发优势，并通过过度投资优质但有风险的项目来获得竞争优势。这些发现通过探索印度背景下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颖的见解。该分析可以帮助决策者负责制定招聘和薪酬政策，并开发最佳监控系统，以利用印度高管的认知特征。