Striking a balance: Unraveling the curvilinear relationship between CEO overconfidence and CSR engagement

Drawing on upper echelons theory and stakeholder theory, this study examines the relationship between CEO overconfidence and CSR engagement. It is argued that CEOs with varying levels of overconfidence differ in motivation and approaches to CSR engagement. Both less and more overconfident CEOs have distinct reasons to engage in different CSR activities. Such complexity implies that the relationship between CEO overconfidence and CSR engagement may not be linear but curvilinear. Accordingly, a U-shaped relationship between CEO overconfidence and CSR engagement is proposed. Results of fixed-effect regression analysis using an unbalanced panel of 21,034 firm-year observations representing 2,223 unique U.S. firms support our hypothesis. This study contributes to the emerging body of literature on the effects of CEO characteristics on CSR policies and performance, enhancing our understanding of the driving forces behind firms' CSR engagement.