The relationship between audit quality and managers' overconfidence

Abstract

Financial statements are a tool for reporting and presenting the results of management representative to be in charge of company's resources with the role of an auditor validating the financial statements so that the users of financial statements can use them for judgment and decision making. Thus, the managers do useful accounting information reporting in the financial statements. The managers' overconfidence is one of the manager's actions. As a result, according to the abovementioned, the relationship between audit quality and managers' overconfidence was examined in this study. The study statistical population or spatial territory included companies listed in the Tehran Stock Exchange. The correlation analysis method (using the panel data technique) was used to analyze the data and test the research hypotheses. The results of testing the research model showed that the audit quality has a significant adverse impact on managers' overconfidence of companies' according to Lin et al. model.