Managerial Overcondence and Financial Restatement: Evidence from Tehran Stock Exchange

The individual CEO characteristics are significant factors that can influence the financial reporting quality and financial restatement. Although in Iran most financial restatements aren’t forced, most Iranian firms restate their financial statements Consequently, the main purpose of this study is to examine the impact of CEO overconfidence as one such CEO characteristic, on occurrence of material financial restatements and magnitude of financial restatements for the companies listed on Tehran Stock Exchange (TSE). Therefore, in this study, data of a sample of 138 listed companies in TSE from 2007 to 2013 were investigated. The over-investment is selected as a CEO overconfidence measure. Logit and multivariable linear regression analysis was used to test the hypotheses on a panel data model. Research results showed that CEO overconfidence do not related to occurrence of material restatement and magnitude of restatement. In other words, this behavioral characteristic of CEO has no impact on incidence of material restatement and magnitude of restatement.