Impact of Managerial Overconfidence on the Company Performance in Technological Industries

Student: Serheyevich Pavel

Educational Programme: Strategic Corporate Finance (Master)

Year of Graduation: 2021

This thesis explore how CEO overconfidence affects companies' financial results in technological industry. Nowadays, technological companies are developing faster, and such confident leaders as Mark Zuckerberg, Elon Musk, Jeff Bezos, and others are influencing on this industry. Overconfidence of managers is a behavioral bias that states that managers' biased attitudes lead to optimistically biased distortions. Overconfidence can affect decisions within companies, namely the risk component that the CEO and top management team must take on. Thus, their decisions affect the profitability of the company. This thesis uses five proxies based on the personal characteristics of the CEO and their strength in the company: education, shares in the company, age, chairman on the Board and founder. The research uses two variables for indicate the company's financial profitability – Tobin's Q and ROA. Results of this research prove, that CEO overconfidence significant positive influence on company performance in technological industry.

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