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PurposeThe purpose of this paper is to propose and empirically test intellectual capital (IC) as a mediator in the corporate social responsibility (CSR) and financial performance (FP) relationship.Design/methodology/approachThe empirical research was conducted on 345 European firms listed in the STOXX Europe 600 index. To evaluate the mediating effect of IC, we applied the four-step Baron and Kenny model, tested through an ordinary least squares regression analysis.FindingsThe findings highlighted a partial mediation of IC on the CSR–FP relationship, suggesting that the implementation of CSR strategies has a positive effect on the development of firms' IC, which in turn enhances firms' competitive advantage and superior long-term FPs.Originality/valueWe found a new mediator in the CSR–FP relationship and we contribute to a new line of research that aims to study environmental and sustainability aspects strictly interrelated with IC and performances (sustainable intellectual capital).

A hubris theory of entrepreneurship suggests that financial forecasts are often informed by the use of heuristic methods prone to overconfidence. While overconfidence can be advantageous during the start-up phase, it is also linked to overoptimistic forecasts, nonoptimal outcomes and firm failure. This article uses a data set from 203 micro and small firms operating in North West Italy where overconfidence is measured as the difference between budget estimates and actual results for earnings before interest, taxes, depreciation and amortization (EBITDA), owner equity and borrowing costs. These measures are employed to identify the extent of overconfidence by entrepreneurs in their financial forecasts and to analyse any relationship between overconfidence and the characteristics of the entrepreneur and the firm. A probit analysis is employed to investigate any association between overconfident financial forecasts and subsequent firm failure. The results are consistent with the hypotheses, suggesting that the majority of entrepreneurs are prone to overconfident budgetary forecasts that are directly associated with firm failure. Such overconfidence is mitigated by an entrepreneur's level of educational attainment and the use of budgetary controls. 2009). This article investigates the overoptimistic biases in the context of established firms. Considerable literature exists on the potential for entrepreneurs to be overconfident in their expectations of firm performance but the majority of this evidence is derived from self-reported attitudinal surveys. In addition, this literature has offered no empirical evidence that identifies an association between overconfidence and firm performance and only limited information on the attributes of the entrepreneur, or firm, that may lead to such behaviour (Ucbasuran et al. 2010). Using published data on the budget forecasts and actual results made available for 2012 by a unique sample of 203 Italian micro and small enterprises, this article addresses two research questions. Are entrepreneurial orfirm characteristics related to overconfident attitudes as exhibited in the financial estimations of small firms? Is overconfidence associated with a small firm failure? To address these questions, a novel measure for overconfidence is adopted, computed as the variance between actual and estimated values of three economic indicators:EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization), equity and borrowing costs, derived from comparisons between a firm's balance sheets and financial forecasts over time. We argue that systematic, inflated financial predictions of firm performance signal overconfidence and we operationalise the overconfidence construct as the difference between budgeted and actual performance (Cassar and Gibson 2007;Markovitch, Steckel, Michaut, Philip and Tracy, 2015).

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