CEO Overconfidence and the Timeliness of Goodwill Impairments

• 成果类型: Article
• 署名作者: Chung, Byung Hun; Hribar, Paul
• 署名单位: Nanyang Technological University; University of Iowa
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2016-0555
• 发表日期: 2021
• 页码: 221-259
• 关键词: ACCOUNTING CONSERVATISM; RECOGNITION; association; acquisitions; uncertainty; DIRECTORS; FIRMS

摘要

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.