Managerial overconfidence, CSR and firm value

ABSTRACT

The purpose of our study is to explore the relationship among managerial overconfidence, CSR and firm value. Nonlinear regression and OLS regression are used to test the hypotheses. Managerial overconfidence is measured by the integrated index. The financial data of Korean-listed companies are collected from the DataGuide5 database. The ESG rating of Koran Governance Service (KCGS) is selected as the proxy variable of CSR in Korea. Korean-listed non-financial companies from 2011 to 2016 are selected as the research sample. Empirical results show that managerial overconfidence has a significant and positive impact on firm value; Managerial overconfidence enhances firm value through CSR activities. Our study enriches the research of managerial overconfidence and provides a new perspective within the Eastern culture.

KEYWORDS:

• managerial overconfidence
• CSR
• firm value
• behavioural accounting
• irrational behaviour

Acknowledgments

We appreciate the help of Hyungkee Baek, Yan Cai, and Zhuoqi Teng. We also appreciate the insightful comments and suggestions made by the anonymous reviewers and the editor.

Disclosure statement

No potential conflict of interest was reported by the authors.