Does overconfident CEO lead to corporate environmental misconducts? Evidence from China

• Published in: PloS one Vol. 19; no. 9; p. e0309957
• Main Authors: Zhang, Lu, Li, Dayuan, Xiao, Zhaohua, Jiang, Jialin, Lu, Fenghua
• Format: Journal Article
• Language: English
• Published: United States Public Library of Science 06-09-2024; Public Library of Science (PLoS)
• Subjects: Administrative Personnel; Boundary conditions; Chief executive officers; China; Corporate culture; Corporate governance; Criticism; Decision making; Demographics; Environment; Environmental aspects; Environmental impact; Environmental performance; Environmental protection; Environmental regulations; Evaluation; Executives; Humans; Managers; Personality; Personality traits; Powers and duties; Principal-agent models; R&D; Research & development; Rules; Social responsibility; Stockholders; Sustainable development; Theory; China
• ISSN: 1932-6203; 1932-6203
• DOI: 10.1371/journal.pone.0309957

Enterprises are drawing growing criticism for violating environmental rules. The research examines whether and how top executives' mental bias leads to corporate environmental misconduct (CEI). Drawing on upper echelon theory (UET) and agency theory, we link CEO overconfidence with CEI, and explore the boundary conditions from the perspective of management discretion at the governance level. Using a data set covering the Chinese listed enterprises from 2004 to 2016, the empirical results demonstrate that CEO overconfidence positively and markedly influenced CEI. Moreover, shareholder concentration and CEO duality reinforce the relationship between overconfidence and CEI, whereas board independence is the opposite. The findings clarify ecological outcomes of CEO overconfidence and have remarkable significance in theory and practice.