Univrsity Of Tehran Press Accounting and Auditing Review 2645-8020 22 2 2015 08 23 The effect of managerial overconfidence on the conservatism with respect to the role of external monitoring The effect of managerial overconfidence on the conservatism with respect to the role of external monitoring 183 202 54969 10.22059/acctgrev.2015.54969 FA Ahmad Khodamipour Associate Prof., Faculty of Management and Economics, Shahid Bahonar University, Kerman, Iran 0000-0002-1620-0096 Mostafa Dorri Sedeh Ph.D Student of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran Azadeh Pouresmaily MSc., Faculty of Administrative Sciences and Economics, Vali-e-Asr University, Rafsanjan, Iran Journal Article 2015 03 07 This study investigates the effect of managerial overconfidence on  both conditional and unconditional conservatism considering the role of external monitoring. Data is collected from a sample of 197 firms listed in Tehran Stock Exchange over the period 2004 to 2012. Two measures are used for managerial overconfidence: excess asset growth and debt to equity ratio above the industry median. Unconditional conservatism is measured using an accrual-based measure and the difference between cash flow skewness and earnings skewness (Givoly and Hayn [2000]). Conditional conservatism is measured using Basu’s [1997] asymmetric timeliness measure. The findings indicate that both of managerial overconfidence measures have a significant negative effect on both conditional and unconditional conservatism. In addition, the results indicate that external monitoring significantly mitigates the effect of managerial overconfidence on unconditional conservatism. This study investigates the effect of managerial overconfidence on  both conditional and unconditional conservatism considering the role of external monitoring. Data is collected from a sample of 197 firms listed in Tehran Stock Exchange over the period 2004 to 2012. Two measures are used for managerial overconfidence: excess asset growth and debt to equity ratio above the industry median. Unconditional conservatism is measured using an accrual-based measure and the difference between cash flow skewness and earnings skewness (Givoly and Hayn [2000]). Conditional conservatism is measured using Basu’s [1997] asymmetric timeliness measure. The findings indicate that both of managerial overconfidence measures have a significant negative effect on both conditional and unconditional conservatism. In addition, the results indicate that external monitoring significantly mitigates the effect of managerial overconfidence on unconditional conservatism. https://acctgrev.ut.ac.ir/article_54969_09c7724522af78e38ebd5018b8a4ddca.pdf