The Effect of Managerial Overconfidence on Firm Performance in Emerging Market Asia

Frida Yuniar Prastika

Ari Warokka

Gatot Nazir Ahmad

CEO Overconfidence plays an important role in determining company performance, especially in the Emerging Market Asia period 2010-2019 in the manufacturing, energy, health, and technology sectors. This study uses secondary data taken from Refinitiv Eikon Financial Analysis. This study aims to determine the effect of managerial overconfidence on company performance as proxied by Return on Asset (ROA), Tobin's Q, and Debt to Equity Ratio (DER). This study uses the Principal Component Analysis (PCA) technique and panel data regression. The results of the study indicate that managerial overconfidence has a significant effect on ROA. However, managerial overconfidence does not have a significant effect on Tobin's Q and DER. This explains that managerial overconfidence can directly affect company performance.

Keywords: Managerial Overconfidence Return On Asset Tobin’s Q Debt to Equity Ratio Principle Component Analysis

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