Overconfident Male CEOs and Corporate Outcomes: The Moderating Role of Female CFOs

Abstract

This paper investigates the moderating role of female CFOs on overconfident male CEOs’ behaviors, focusing on cash holdings, investment efficiency, and analysts’ forecast optimism. Analyzing a sample of Malaysian firms from 2016 to 2020, we find that overconfident male CEOs are associated with lower cash holdings, higher investment efficiency, and more optimistic analyst forecasts. Female CFOs moderate overinvestment tendencies, leading to more disciplined capital allocation, but their influence on cash holdings and forecast optimism is limited, likely due to organizational power dynamics and career constraints. Institutional factors further shape these dynamics — Bumiputera-dominated boards promote financial conservatism with higher cash reserves and forecast optimism but may limit female CFOs’ authority, while family firms exhibit reduced investment efficiency under overconfident leadership, reflecting a governance-control misalignment. These findings, robust to endogeneity concerns, highlight how leadership diversity and institutional structures interact to influence corporate financial outcomes.