Managerial Overconfidence and Earnings Overstatement

Subject Areas : Management Accounting

Solaleh NasiriPour Dori ¹ ( دانشجوی کارشناسی ارشد، دانشگاه آزاد اسلامی واحد کرج )
Bahman Banimahd ² ( استادیار گروه حسابداری دانشگاه آزاد اسلامی واحد کرج )
Hamid Ahmadzadeh ³ ( استادیار گروه حسابداری دانشگاه آزاد اسلامی واحد کرج )

Received: 2015-12-18 Accepted : 2016-01-10 Published : 2016-10-22

Keywords: Earnings Overstatement, Managerial Overconfidence, logistic regression,

Abstract :

The main objective of this study is to investigate the relationship between earnings management and managerial overconfidence in listed firms on the Tehran Stock Exchange. This study has attempted to answer the question as to whether that overconfidence from the chief executive officer can impact firm's earnings management. To answer the question of this study, we have investigated 915 year-firm observations from listed firms on Tehran Stock Exchange from 2004-2014. Data analysis and hypothesis testing was performed by using binary logistic regression. The results confirmed that as managerial overconfidence increased, then the earnings overstatement will increases. In addition, the results indicated that there is a significant and negative correlation between debt ratio and size of the firms with maximization of earnings management.

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