Goodwill impairment and CEO overconfidence

Robert Killins, Thanh Ngo and Hongxia Wang

Journal of Behavioral and Experimental Finance, 2021, vol. 29, issue C

Abstract: We examine how CEO overconfidence affects goodwill impairments after the adoption of SFAS 142 in US firms. Consistent with the nature of the cognitive position of overconfident CEOs, we find that both the likelihood and the magnitude of goodwill impairment recognition decrease when CEO overconfidence is elevated, providing evidence that SFAS142 is not applied consistently across firms. Overconfident CEOs are reluctant to book goodwill impairment losses. The results are robust with various model specifications, proxies for CEO overconfidence, and subsamples, suggesting that biased and less transparent financial reporting on goodwill impairment in firms with overconfident CEOs is an unintended consequence of SFAS142.

Keywords: CEO overconfidence; Goodwill impairment; SFAS 142 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2214635021000034

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:29:y:2021:i:c:s2214635021000034

DOI: 10.1016/j.jbef.2021.100459

Access Statistics for this article

Journal of Behavioral and Experimental Finance is currently edited by Michael Dowling and Jürgen Huber

More articles in Journal of Behavioral and Experimental Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().