Managerial Overconfidence and Corporate Green Innovation: Substantive or Strategic Innovation?

ABSTRACT Against the backdrop of the transition toward a green economy, this study examines the effect of managerial overconfidence on firms' green innovation performance, encompassing both substantive and strategic dimensions. Using a sample of Chinese A‐share listed companies from 2011 to 2021, we find that managerial overconfidence is positively associated with green innovation output. The results still hold after several robustness tests. Mechanism analysis reveals that this effect operates primarily through increased research and development (R&D) investment. Furthermore, cross‐sectional tests reveal that this positive effect is more pronounced among state‐owned enterprises (SOEs) and firms with higher executive ownership. Overall, our findings highlight the crucial role of managerial traits in shaping corporate environmental strategies during the transition to a sustainable economy.