Publication Type

Conference Paper

Publication Date

12-2013

Abstract

Existing research links CEO overconfidence to a number of corporate decisions including overinvestment, external acquisitions, and earnings management. These findings raise the question of whether counterparties distinguish between differences in CEOs, and how they respond to it. We focus on two key counterparties – auditors and credit rating agencies – and examine whether audit fees and credit ratings are affected by CEO overconfidence. We find a positive association between audit fees and CEO overconfidence, suggesting that auditors exert more effort or increase the risk premium associated with auditing firms with more overconfident CEOs. We also find a significant negative association between CEO overconfidence and credit ratings, suggesting that overconfident CEOs are associated with higher agency costs of debt and higher credit risk.

Discipline

Accounting

Research Areas

Financial Performance Analysis

Publication

SMU SOAR Accounting Symposium 2013, December 12-13

First Page

1

Last Page

42

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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Accounting Commons

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