Do CEO overconfidence and demographic characteristics moderate the effect of R&D investment on firm performance?

Purpose This paper aims to examine the influence of overconfident or conservative CEOs on the performance feedback of R&D investment, as well as the combined impact of CEO overconfidence and demographic characteristics on the relationship between performance feedback of R&D investments. Design/methodology/approach Grounded in the upper echelon theory, listed companies in China are selected as samples, and the Heckman two-stage model is used to examine all the models. Findings This paper reveals that overconfident CEOs tend to make suboptimal investment decisions. These decisions are influenced by cognitive biases that have a negative impact on the performance of R&D investments. However, the negatively moderating effects of CEO overconfidence can be mitigated if they have overseas experience or academic background, or they are younger. Originality/value These mechanisms highlight the various ways in which CEO psychological factors and demographic characteristics can complement each other.