Volume 18, Number 2, December 2023
| Impact of Managers' Overconfidence and Accounting Conservatism Principle on Investors' Idiosyncratic Risk
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Abstract
This study mainly explores the impact of CEO overconfidence, the Accounting Conservatism Principle, and CEO overconfidence on the idiosyncratic risk to investors. The sample adopts the database of the Taiwan Economic Newspaper. Taking Taiwan listed companies as an example, the research period is 10 years from 2006 to 2016. The sample observes 11,071 pieces of annual data to explore the impact of CEO overconfidence and Accounting Conservatism Principles on investors' idiosyncratic risk. The empirical results in this research are consistent with the predictions. The result shows that under the oversight of accounting soundness principles, CEO overconfidence will avoid problematic investment solutions, so investors will bear less fluctuations in the heterogeneity of stock returns .
Keywords: Idiosyncratic Risk, Idiosyncratic Volatility, Firm-Specific Risk, Overconfidence, Accounting Conservatism Principle
JEL Classification: G11, G14