Journal article
CEO Overconfidence and the Timeliness of Goodwill Impairments
The Accounting review, Vol.96(3), pp.221-259
05/01/2021
DOI: 10.2308/TAR-2016-0555
Abstract
We use survival analysis techniques to examine whether overconfidence affects the likelihood and timeliness of goodwill impairments. We predict that overconfident CEOs have a lower likelihood of impairment in any firm-quarter, and take longer, on average, to impair goodwill. Using the Cox proportional-hazards model and the accelerated failure time model, we find evidence consistent with both predictions. In cross-sectional tests, we find having more financial experts on the board mitigates the effect of CEO overconfidence on the timeliness of goodwill impairments, while uncertainty in predicting a firm's future performance strengthens the effect. Additional results show that overconfident CEOs hold overly optimistic expectations of their firms' performance, and that they underweight negative market signals prior to the impairment decisions.
Details
- Title: Subtitle
- CEO Overconfidence and the Timeliness of Goodwill Impairments
- Creators
- Byung Hun Chung - Nanyang Technological UniversityPaul Hribar - University of Iowa
- Resource Type
- Journal article
- Publication Details
- The Accounting review, Vol.96(3), pp.221-259
- Publisher
- Amer Accounting Assoc
- DOI
- 10.2308/TAR-2016-0555
- ISSN
- 0001-4826
- eISSN
- 1558-7967
- Number of pages
- 39
- Grant note
- Nanyang Technological University University of Iowa
- Language
- English
- Date published
- 05/01/2021
- Academic Unit
- Accounting
- Record Identifier
- 9984380525602771
Metrics
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