Risk, reward, and receivables: unpacking the impact of overconfident CEOs

Nga Nguyen; Thanh Vu; Kiet Tuan Duong

doi:10.1016/j.bar.2026.101844

Risk, reward, and receivables: unpacking the impact of overconfident CEOs

Nga Nguyen
, Thanh Vu
, Kiet Tuan Duong^*

^*Corresponding author for this work

School of Business and Creative Industries

Research output: Contribution to journal › Article › peer-review

Abstract

This study examines the impact of CEO overconfidence on trade credit provision and finds that suppliers led by overconfident CEOs tend to have significantly longer trade receivable periods compared to their peers with non-overconfident CEOs. Our results remain robust across a comprehensive set of validation tests, including alternative CEO-overconfidence measures, propensity score matching, entropy-balancing procedures, and analyses surrounding CEO-turnover events. We further document that more aggressive trade credit decisions by overconfident CEOs are associated with enhanced future sales and market share, while simultaneously reducing operating volatility. The impact of CEO overconfidence on trade credit is more pronounced in firms with active investment activity, in high-power CEO firms, and under financially constrained conditions.

Original language	English
Article number	101844
Number of pages	19
Journal	The British Accounting Review
Early online date	26 Feb 2026
DOIs	https://doi.org/10.1016/j.bar.2026.101844
Publication status	E-pub ahead of print - 26 Feb 2026

Keywords

receivables
trade credit
CEO overconfidence
firm risks
behaviour bias

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10.1016/j.bar.2026.101844

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2026 02 10 Duong et al Risk accepted
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Licence: CC BY-NC-ND
Embargo ends: 26/02/2028 00:00 GMT

Cite this

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title = "Risk, reward, and receivables: unpacking the impact of overconfident CEOs",

abstract = "This study examines the impact of CEO overconfidence on trade credit provision and finds that suppliers led by overconfident CEOs tend to have significantly longer trade receivable periods compared to their peers with non-overconfident CEOs. Our results remain robust across a comprehensive set of validation tests, including alternative CEO-overconfidence measures, propensity score matching, entropy-balancing procedures, and analyses surrounding CEO-turnover events. We further document that more aggressive trade credit decisions by overconfident CEOs are associated with enhanced future sales and market share, while simultaneously reducing operating volatility. The impact of CEO overconfidence on trade credit is more pronounced in firms with active investment activity, in high-power CEO firms, and under financially constrained conditions.",

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Risk, reward, and receivables: unpacking the impact of overconfident CEOs

Abstract

Keywords

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