Does CEO Overconfidence Affect Workplace Safety?
49 Pages Posted: 24 Sep 2021 Last revised: 30 May 2023
Date Written: May 29, 2023
Abstract
We study the impact of CEO overconfidence on workplace safety. We provide robust evidence of a positive relation between CEO overconfidence and workplace injury rates, implying that CEO overconfidence impairs workplace safety. In cross-sectional analysis, we find that the documented effect is amplified among firms with greater concentration of decision rights in headquarters and higher employee turnover, while is mitigated among firms with stronger labor union presence and more effective corporate governance mechanisms. Additional analysis points to increased employee workload and poor corporate safety culture as the mechanisms behind the documented detrimental effect of CEO overconfidence on workplace safety.
Keywords: CEO overconfidence, workplace safety, injury rates
JEL Classification: G30; G41; J28
Suggested Citation: Suggested Citation