Abstract

This paper primarily focuses on examining the correlation between CEO overconfidence and firm investment. Initially, I aimed to investigate whether there are any differences in confidence levels between male and female CEOs. The outcome of my research was that I was unable to identify any notable differences in the effects of CEO overconfidence on investment between male and female executives. This implies that regardless of gender, when a CEO displays overconfidence, they are likely to exhibit a similar inclination towards overinvestment. Additionally, my research focuses on the impact of the COVID-19 pandemic on CEO overconfidence and its subsequent influence on firm investment behavior. My study successfully establishes this connection. Specifically, in the current context of the COVID-19 pandemic, the relationship between CEO overconfidence and investment ratios is expected to weaken. However, the primary reason for this weakening effect is the volatile economic climate brought about by the COVID-19 era. The pandemic has significantly influenced companies to reduce their investments, resulting in the emergence of underinvestment as a prevalent issue, irrespective of the level of CEO confidence. In addition, my research reveals that a high level of CEO confidence is not able to substantially augment investment levels or adequately mitigate the problem of underinvestment in light of the substantial disruptions caused by the pandemic.