The Influence of Ceo's Overconfidence on a Corporate Default

This work comprehensively investigates from the perspective of corporate governance and behavioral finance whether the overconfident behavior of a CEO could drive a subsequent corporate default. Using matched samples of listed TSEC firms in Taiwan that had experienced corporate defaults. The results demonstrate a highly positive correlation between a CEO’s overconfidence and the subsequent corporate default. This study also provides evidence that CEO’s overconfidence level has a significantly positive relation to the losses of corporate defaults, indicating that heavier losses from corporate defaults can be attributed to higher CEO’s overconfidence levels. This study analyzes the possibility that managers' behavior may lead to business management problems, which can be used as a reference for improving the corporate governance system