Exploring the Impact of Overconfidence on Fast Strategic Decision-making: Power as a Moderator
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2025-07-01
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en
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This study investigates how CEO overconfidence influences the speed of strategic decision-making (SDM) in mergers and acquisitions and how CEO power moderates this relationship. Integrating behavioral strategy, dual-process theory and Upper Echelons Theory, this study contributes to the literature on executive cognition, decision speed and the interplay between individual biases and power structures. Overconfidence is measured through acquisition frequency and debt-to-equity ratio, while CEO power is captured via blockholding, tenure, and duality. Using multiple regression analyses on data from 2,110 North American publicly listed firms (2002–2024), the findings demonstrate that overconfident CEOs make faster decisions, particularly when overconfidence is based on acquisition behavior. Moreover, CEO power in the form of duality amplifies this effect, underscoring the role of decision authority in accelerating strategic decisions. This study aims to contribute to a deeper understanding of how executive cognition and power structures jointly shape the speed of strategic decisions, emphasizing the importance of awareness among managers, boards, and stakeholders regarding the role of CEO overconfidence in acquisition decision speed.
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Faculteit der Managementwetenschappen