MANAGERIAL OVERCONFIDENCE, INTERNAL CONTROLS AND CORPORATE EFFECTIVE TAX RATE
Journal Title: Topics in Economics, Business and Management (EBM) - Year 2018, Vol 2, Issue 2
Abstract
In this paper, we make use of the panel data of 2010-2015 Chinese listed companies from Shanghai and Shenzhen A-share markets to explore the impact of managerial overconfidence on the corporate effective tax rate. We identify that overconfident managers are inclined to pursue more authoritativeness and controlling force, so they need to establish the very correct perception through signal expression in accounting behavior—conducting more earnings management activities to display the performance in advance, which makes the effective tax rate increased. Further analyzation shows that a good internal control environment could inhibit the overconfident behavior and assess the group contributions more faithfully, so that the costs of signal expression increased, and the effective tax rate finally decreased. All these results suggest that internal control can exert positive influence on managers behaviors and enhance the corporate value.
Authors and Affiliations
Zhang Shu-Hui, Chen Ke-Ying, Wang Rui-Wen
Keywords
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- EP ID EP412004
- DOI 10.26480/icemi.02.2018.33.37
- Views 144
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