 Subordinate executives’ confidence and labor investment efficiencyJoye Khoo and Cheung, Adrian (Wai Kong) International Review of Economics & Finance, 2025, vol. 98, issue C Abstract: We examine confidence, an important type of cognitive bias, at the subordinate executive level and provide new insights to the literature on labor investment efficiency. Using a sample of US firms from 1999 to 2020, we find that firms having highly confident subordinate executives exacerbates inefficient labor investment, which is consistent with the view that highly confident subordinate executives influencing risk-taking decisions to their advantage(s), which distorts labor investment efficiency. This detrimental impact on labor investment efficiency mainly manifests in firms with weaker external governance. Our findings are robust to alternative explanations, alternative proxies for both subordinate executives’ traits and labor investment efficiency, additional control variables (including CEO traits and bias), and various approaches to addressing endogeneity issues. This study contributes to the literature by shedding light on how personal traits in the top management team matter in labor investment decisions. Keywords: Subordinate executives; Labor investment efficiency (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:98:y:2025:i:c:s1059056025000590 DOI: 10.1016/j.iref.2025.103896 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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