Managerial Overconfidence and Accounting Conservatism Academic Article uri icon

abstract

  • Overconfident managers overestimate future returns from their firms' investments. Thus, we predict that overconfident managers will tend to delay loss recognition and generally use less conservative accounting. Furthermore, we test whether external monitoring helps to mitigate this effect. Using measures of both conditional and unconditional conservatism respectively, we find robust evidence of a negative relation between CEO overconfidence and accounting conservatism. We further find that external monitoring does not appear to mitigate this effect. Our findings add to the growing literature on overconfidence and complement the findings by Schrand and Zechman [2011] that overconfidence affects financial reporting behavior. , University of Chicago on behalf of the Accounting Research Center, 2012.

published proceedings

  • JOURNAL OF ACCOUNTING RESEARCH

altmetric score

  • 1.5

author list (cited authors)

  • Ahmed, A. S., & Duellman, S.

citation count

  • 352

complete list of authors

  • Ahmed, Anwer S||Duellman, Scott

publication date

  • January 1, 2013 11:11 AM

publisher