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CEO Overconfidence and the Probability of Corporate Failure: Evidence from the United Kingdom

Leng, Jingsi; Ozkan, Aydin; Ozkan, Neslihan; Trzeciakiewicz, Agnieszka


Jingsi Leng

Aydin Ozkan

Neslihan Ozkan


This paper investigates the impact of CEO overconfidence on the probability of corporate bankruptcy. Using a large dataset of UK firms, we find that firms with overconfident CEOs face a greater risk of failure. The presence of overconfident CEOs leads to a higher risk of bankruptcy in innovative environments, while the impact is insignificant in non-innovative environments. Moreover, overconfident CEOs can increase the bankruptcy risk of firms with less conservative accounting. We find that banks, as major creditors, seem to play an important role in constraining CEO overconfidence, and hence in reducing the likelihood of bankruptcy. Finally, the impact of overconfidence on the probability of bankruptcy is stronger in firms with generalist CEOs than specialist CEOs.


Leng, J., Ozkan, A., Ozkan, N., & Trzeciakiewicz, A. (in press). CEO Overconfidence and the Probability of Corporate Failure: Evidence from the United Kingdom. The European journal of finance,

Journal Article Type Article
Acceptance Date Dec 16, 2020
Online Publication Date Jan 24, 2021
Deposit Date Jan 12, 2021
Publicly Available Date Jul 25, 2022
Journal The European journal of finance
Print ISSN 1351-847X
Publisher Routledge
Peer Reviewed Peer Reviewed
Keywords CEO overconfidence; Hazard model; Corporate bankruptcy; Corporate governance
Public URL
Publisher URL


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