This study investigates whether Managerial overconfidence behavior can explain earnings manipulation using accruals activities in the Egyptian market. In order to reach a conclusion, a sample over the period 2006 to 2020 is analyzed to provide a sample of data about managers’ overconfidence behavior and accrual-based earnings management (AB_EM). Further, the results of this study reveal that managerial overconfidence does not impact the manipulation of earnings through discretionary accruals except for companies with a dividend yield of zero. Further, the results reveal that an overconfident manager’s behavior affects significantly AB_EM before the revolution as opposed to after the revolution. Finally, this study contributes to the existing literature on overconfidence by analyzing the tendency of overconfident managers to manipulate earnings through discretionary accruals. Further, this study develops adjusted indices and scores to measure managerial overconfidence which would be of great significance for future research conducted in developing markets that are similar to the Egyptian market.
Cite this paper
El-Massry, N. , Sakr, A. and Amer, M. (2023). Managerial Overconfidence and Accrual-Based Earnings Management: Evidence from Egyptian Listed Firms. Open Access Library Journal, 10, e011. doi: http://dx.doi.org/10.4236/oalib.1110011.
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