Do not bite off more than you can chew; Examining Managerial Overconfidence and Financial Reporting Quality in Southeast Asian Countries

Agustina Adna Fidelianti; Albertus Henri Listyanto Nugroho

doi:10.14414/tiar..5607

, Articles

Do not bite off more than you can chew; Examining Managerial Overconfidence and Financial Reporting Quality in Southeast Asian Countries

Agustina Adna Fidelianti⁺⁻
Albertus Henri Listyanto Nugroho⁺⁻

Agustina Adna Fidelianti

Department of Accounting, Faculty of Business, Universitas Kristen Duta Wacana, Yogyakarta, Indonesia

Albertus Henri Listyanto Nugroho

Department of Accounting, Faculty of Business, Universitas Kristen Duta Wacana, Yogyakarta, Indonesia

https://orcid.org/0000-0002-2298-734X

DOI: 10.14414/tiar..5607

Published 2026-10-24

Keywords

Managerial Overconfidence
Financial Reporting Quality
Developing Countries

How to Cite

Fidelianti, A. A., & Nugroho, A. H. L. (2026). Do not bite off more than you can chew; Examining Managerial Overconfidence and Financial Reporting Quality in Southeast Asian Countries. The Indonesian Accounting Review. https://doi.org/10.14414/tiar..5607

Abstract

This study investigates the effect of managerial overconfidence on the decline in financial reporting quality (FRQ). Managerial overconfidence is a psychological bias that affects future company performance, leading to irrational expectations and decision-making. Therefore, managers manage earnings and make financial reporting not represent the situation. This study highlights the gap in the behavioral literature by examining the cognitive biases of managers in developing countries that are full of uncertainty regarding the company’s future strategic decision-making. This study employs a purposive sampling method, focusing on a sample of manufacturing companies from developing Southeast Asian countries, with a 10-year observation period from 2011 to 2021. The total sample comprises 6,800 company observations, with data collected from the Bureau Van Dijk and Refinitiv Thomson Reuters databases. This study employs ordinary least squares (OLS) regression to test all hypotheses. These findings show that in developing countries, managers tend to exhibit opportunistic behavior by accepting the attribution of past financial results without rational thinking. This study contributes to the broader behavioral accounting literature by examining managerial psychological biases that influence future-oriented judgments and financial reporting quality in developing countries and highlighting the importance of behavioral factors in strategic decision-making.

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