The more confident the more digital? A study of the mechanisms of CEO overconfidence on corporate digital transformation

Purpose This study examines how CEO overconfidence influences corporate digital transformation and explores the cognitive-behavioral mechanisms underlying this relationship. Design/methodology/approach Using a panel dataset of Chinese A-share listed firms from 2010 to 2024, this study constructs a language-based measure of CEO overconfidence from CEOs' personal social media posts and their directly attributable statements reported in publicly available sources. Two-way fixed-effects models are employed to examine the relationship between CEO overconfidence and corporate digital transformation, supplemented by robustness checks including alternative measures, additional fixed effects, instrumental variable analyses and Heckman two-stage analysis. Findings The results show that CEO overconfidence is positively associated with firms' digital transformation. This effect operates primarily through entrepreneurial orientation and strategic risk-taking, with the two mechanisms forming a sequential mediating relationship. Furthermore, the positive effect of CEO overconfidence on digital transformation is strengthened when CEOs possess an IT background and greater CEO power, as well as when firms have higher levels of resource slack and operate in regions with higher levels of market development, but is weakened in state-owned enterprises. Originality/value This study advances upper echelons theory by developing a commitment-based account of how CEO overconfidence shapes strategic change under uncertainty and by specifying a cognition–posture–action process through which executive cognition is translated into firm-level digital transformation. Methodologically, it introduces a language-based measure of CEO overconfidence derived from CEOs' linguistic expressions, offering an alternative approach to capturing executive cognition beyond traditional financial proxies.