ADELANTE
Institutional Repository

Managers and executives make significant decisions for firms and exercise corporate governance affecting the firm’s profitability. The study investigates whether overconfidence in executives positively or negatively relates to the firm’s profitability, and how exercising corporate governance practices influence the relationship between managerial overconfidence and firm profitability. The executive compensation ratio (ECR) was computed to measure the managerial overconfidence variable, and firms’ return on equity (ROE) was collected from the Annual Form 17-A Reports in the PSE Edge Portal as a measurement of the firm profitability variable. The annual corporate governance report of the top 24 publicly listed companies (PLCs) was also collected from the PSE Edge Portal to measure the corporate governance variable. The results of the study revealed the following: there is no significant relationship between the managerial overconfidence (ECR) and the return on equity of the firms, and corporate governance has no material influence on the impact of managerial overconfidence on the firm profitability of the top publicly listed companies in the Philippines. The findings contribute to the pool of studies that relate to managerial overconfidence, firm profitability, and corporate governance.