The Real Earnings Management Mediation: Relation Between Ceo Overconfidence and Subsequent Performance

Abstract

The purpose of this study is to identify the relationship between the CEO overconfidence and the subsequent performance. Furthermore, the study examines the intermediary role of Real Earnings Management (REM). The SPSS version of PROCESS is used to assess the direct, indirect and total effects of CEO overconfidence on subsequent performance. The number of bootstraps for percentile bootstrap confidence intervals is 50 thousand. The results of the study showed that the CEO overconfidence has a significant positive impact on the company’s subsequent performance. Furthermore, REM acts as a mediator between the overconfidence of the manager and future indicators. The results of this paper may be of interest to accounting regulators, as excessive confidence may affect future performance through REM. This information may be useful in assessing the need for overconfidence managers. This study complements the existing lack of empirical data on the indirect impact of managers’ overconfidence on the company’s subsequent performance.

Keywords

• ceo overconfidence
• subsequent performance
• real earnings management