CEO overconfidence and ESG misconduct: the moderating role of corporate governance in emerging markets

Purpose This study aims to investigate whether chief executive officer overconfidence (CEOO) leads to environmental, social, and governance misconduct (ESGMIS) and examines whether corporate governance (CG) mechanisms mitigate this relationship. Design/methodology/approach The study uses a panel dataset of non-financial firms listed in Indonesia from 2017 to 2022. This analysis employs a fixed-effects panel regression model with year fixed effects and firm-clustered standard errors. Robustness tests are conducted using alternative variable specifications to validate the findings. Findings The results indicate that CEOO does not exert a direct effect on ESGMIS; rather, its impact is conditional and becomes significant only when CG is considered. Specifically, CG weakens the positive relationship between CEOO and ESGMIS, suggesting that the influence of managerial traits depends on the governance structure. Originality/value This study advances the literature on CEO behavior by exploring its implications for ESGMIS, a relatively underexplored area. It provides empirical evidence from an emerging market context, where governance mechanisms are still evolving, and managerial discretion is comparatively high. Methodologically, the study contributes by employing a composite index to measure CEOO, offering a more comprehensive proxy than traditional single-measure approaches.