The effect of managerial overconfidence on the conservatism with respect to the role of external monitoring | ||
| بررسیهای حسابداری و حسابرسی | ||
| Article 4, Volume 22, Issue 2, 2015, Pages 183-202 PDF (349.95 K) | ||
| Document Type: Research Paper | ||
| DOI: 10.22059/acctgrev.2015.54969 | ||
| Authors | ||
| Ahmad Khodamipour1; Mostafa Dorri Sedeh* 2; Azadeh Pouresmaily3 | ||
| 1Associate Prof., Faculty of Management and Economics, Shahid Bahonar University, Kerman, Iran | ||
| 2Ph.D Student of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran | ||
| 3MSc., Faculty of Administrative Sciences and Economics, Vali-e-Asr University, Rafsanjan, Iran | ||
| Abstract | ||
| This study investigates the effect of managerial overconfidence on both conditional and unconditional conservatism considering the role of external monitoring. Data is collected from a sample of 197 firms listed in Tehran Stock Exchange over the period 2004 to 2012. Two measures are used for managerial overconfidence: excess asset growth and debt to equity ratio above the industry median. Unconditional conservatism is measured using an accrual-based measure and the difference between cash flow skewness and earnings skewness (Givoly and Hayn [2000]). Conditional conservatism is measured using Basu’s [1997] asymmetric timeliness measure. The findings indicate that both of managerial overconfidence measures have a significant negative effect on both conditional and unconditional conservatism. In addition, the results indicate that external monitoring significantly mitigates the effect of managerial overconfidence on unconditional conservatism. | ||
| Keywords | ||
| conditional conservatism; External Monitoring; managerial overconfidence; unconditional conservatism | ||
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