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How cocky money managers are secretly destroying the planet

Researchers from multiple UK universities studied nearly 600 US companies from 2006 to 2022 to examine CFOs' influence on environmental compliance.
They investigated how overconfidence among CFOs, who make financial decisions, relates to higher environmental violations and financial risks, noting stakeholder laws' potential effects.
The team discovered that companies led by overconfident CFOs in brown sectors, such as air transport and petroleum, breached environmental regulations in about 62% of cases, whereas firms in green sectors had a violation rate of just 10.6%.
Dr. Uymaz emphasized that implementing regulatory measures to mitigate executives' overconfidence can enhance investors' trust and confidence, while also addressing the tendency toward short-term decision-making linked to this bias.
The findings suggest that addressing CFOs' psychological biases and enforcing stakeholder-focused laws can reduce environmental harm and improve companies' long-term financial health.

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