Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 13, 2023 erstellt
Beschreibung:
This study examines the effect of CEOs’ overconfidence on the association between both total R&D expenditure and capitalised development costs and future cash flows. Further, we reflect on prior corporate governance literature highlighting the less overconfident nature of female directors along with their strong monitoring role by examining the potential moderating effect of board gender diversity on these associations. Based on a large sample of R&D active firms within an IFRS setting, our results show that the associations between both total R&D expenditure and capitalised development costs and future cash flows, while positive, are significantly weaker for firms with higher levels of CEO overconfidence. This finding provides evidence that more overconfident CEOs overestimate the future economic benefits associated with R&D and, in particular, the amount of development costs that are capitalised. The latter implies that the signalling effect of such capitalisation is diluted. Moreover, our results indicate that board gender diversity moderates the managerial bias associated with overconfidence in the context of R&D expenditure. As such, the study makes significant contributions to the overconfidence strands of the literature in finance, accounting and corporate governance and the findings raise important policy implications