Big baths and CEO overconfidence

Research output: Contribution to journalArticleAcademicpeer-review

3 Citations (Scopus)


This paper empirically investigates the relationship between managerial overconfidence and write-offs following CEO turnover. Incoming CEOs often engage in big bath accounting as they dispose of poorly performing projects. Overconfident managers overestimate their abilities and consequently have upwardly biased expectations concerning future firm performance. I hypothesise that overconfident CEOs are less likely to engage in a big bath following managerial change. The empirical results confirm this hypothesis by showing that big baths at CEO turnover are significantly less frequent among overconfident CEOs.

Original languageEnglish
Pages (from-to)1-21
Number of pages21
JournalAccounting and Business Research
Issue number2
Publication statusPublished - 23 Feb 2021


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