A new study finds that overconfident CEOs are less likely to delegate responsibilities to their teams, particularly in complex, high-stakes settings such as major mergers and acquisitions. This reluctance can be especially consequential when transactions involve intricate negotiations, unfamiliar industries, or significant financial risk—situations where diverse expertise could strengthen decision-making.
“Organisations have only grown more complex over time, often operating across multiple countries and sectors,” says Jared Smith, co-author of the study. “As a result, it is increasingly important to bring more voices to the table. Drawing on varied expertise and experience can help companies navigate today’s complex business environment.” Delegation, he notes, is not simply a managerial preference but a strategic tool that allows CEOs to incorporate specialised knowledge while freeing up their own capacity to address broader organisational challenges.
To examine the relationship between CEO overconfidence and delegation, researchers analysed 3,690 mergers and acquisitions conducted by publicly traded firms between 2000 and 2019. The study focused on transactions valued at $50 million or more and representing at least 1% of the acquiring company’s equity. In total, these deals involved 1,634 CEOs, providing a substantial dataset for evaluating leadership behaviour in high-pressure contexts.
The researchers assessed CEO confidence using an established method based on executives’ stock option exercise patterns, which can signal overconfidence in future firm performance. Delegation, meanwhile, was measured by examining press releases, news coverage, and “background of the merger” documents submitted to the U.S. Securities and Exchange Commission. Mentions of non-executive participants in these materials were treated as evidence that responsibilities had been shared beyond the C-suite. Cross-referencing these sources helped validate whether those individuals were actively involved in the deal-making process.
The findings show that 41% of CEOs in the sample were classified as overconfident. Compared to their peers, these leaders were 10–15% less likely to delegate responsibilities during mergers and acquisitions. The tendency was even more pronounced in situations where delegation would arguably be most valuable. For instance, when companies pursued acquisitions in unfamiliar industries, overconfident CEOs were especially unlikely to involve additional expertise—despite the heightened need for specialised knowledge.
Perhaps most strikingly, the study found that as organisational complexity increased, overconfident CEOs became even less inclined to delegate. Firms with multiple business segments—where leaders face more complex information environments—saw a sharper decline in delegation among overconfident executives. This runs counter to conventional expectations that greater complexity should encourage leaders to seek broader input. While confidence remains an important leadership trait, the findings suggest that excessive confidence may limit collaboration and hinder a company’s ability to navigate complex strategic decisions.
More information: Matthew Josefy et al, Leave It to Me: Overconfident CEOs’ Lower Propensity to Delegate Acquisition Responsibility, Journal of Management Studies. DOI: 10.1111/joms.70095
Journal information: Journal of Management Studies Provided by North Carolina State University