Impact of CEO Duality and Overconfidence on Construction Technology Innovation: Evidence from China

Abstract

The construction industry has long been regarded as a relatively conservative and less innovative sector. Adjusting corporate governance structure is an effective method to promote innovation in the construction industry, as it can internally address the reluctance to innovate within companies. While it is widely known that the chief executive officer (CEO) plays a crucial role in firm innovation, few studies have explored the effects of CEO duality on innovation from a corporate governance aspect, which serves as a pressing need for construction industry. This study investigates the influence of CEO duality and its important moderating variable, CEO overconfidence, on corporate innovation based on a sample of stock-listed China construction companies and their patent data from 2009 to 2022. Quantile regression is applied to deeply investigate the variation in the impact of CEO duality throughout different conditional quantiles of the construction innovation performance distribution. The results demonstrate a favorable correlation between CEO duality and corporate innovation performance, and the promotion effect of CEO duality is more significant for firms with lower innovation performance. Additionally, CEO overconfidence negatively moderates the impact of CEO duality on corporate innovation. These findings indicate that CEO duality plays a noteworthy role in promoting corporate innovation within the construction industry and more effective corporate governance mechanism is needed to control CEO overconfidence, which promotes the negative impact of CEO duality. The research provides a research framework for exploring the dynamic impact of corporate governance structures on firm performance in the future. The results of this study are of significant importance for both the theoretical understanding and practical implementation of corporate governance mechanisms in the construction industry.