CEO Overconfidence, Real Earnings Management, and Future Performance: Evidence from Indonesia

Abstract

The purpose of this study is to examine whether an overconfident CEO affects real earnings management and indirectly affects future performance. An overconfident CEO is measured using three metrics to obtain robust results. The sample utilized contains data from manufacturing companies listed on the Indonesian stock exchange on from 2014 to 2016. The results of this study show that an overconfident CEO has no effect on real earnings management. The other results of this study also indicate that an overconfident CEO and real earnings management have a negative effect on future company performance. However, the results of testing in this study indicate that there is no mediating relationship between an overconfident CEO and future operational performance of a company through real earnings management.