The Role of Corporate Governance Mechanisms in Restraining CEOs Overconfidence in Emerging Markets: Empirical Evidence From The Egyptian Context

Document Type : Original Article

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Teacher in the Accounting Department Faculty of Commerce - Cairo University

Abstract

We aim to investigate the role of corporate governance mechanisms in restraining CEOs behavioral disorders, especially concerning CEOs overconfidence in emerging markets. To achieve our research objectives, we undertake an empirical study on firms listed in EGX during the period from (2018-2023). As for capital structure, the empirical investigation has documented a significant positive association between managerial ownership and CEOs overconfidence. There is no empirical evidence supporting the effect of institutional ownership on CEOs overconfidence. Concerning internal governance mechanisms, we documented significant negative associations between internal controls' effectiveness, the monitoring role of the audit committee as measured by audit committee activism and size, and CEOs overconfidence. Finally, as for external governance mechanisms, we documented a significant negative association between audit quality and CEOs overconfidence. Additional investigation verified the role of covid-19 pandemic in restraining CEOs overconfidence in emerging markets.

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