The Effect of Managerial Overconfidence on Conditional and Unconditional Conservatism

Normal 0 false false false EN-US X-NONE FA MicrosoftInternetExplorer4 The purpose of this study is investigating the effect of managerial overconfidence on conditional and unconditional conservatism. To attain the mentioned purpose، two hypotheses were developed and a sample of 77 firms was selected by systematic elimination method from the companies listed in Tehran stock exchange during the years of 2002 to 2011. In order to measure conditional conservatism، khan and Watts (2009) model and to measure unconditional conservatism، measure of Givoly and Hayn (2000) and to measure managerial overconfidence، two measures of research of Ahmed and Duellman (2013) were used. Also، to estimate research hypotheses، weighted least squares and panel methods were used. Results of estimating research models indicated that the effects of managerial overconfidence on conditional and unconditional conservatism are negative and significant. In other words، existence of overconfidence in top managers results in decreasing of financial reporting conservatism.