Univrsity Of Tehran Press Accounting and Auditing Review 2645-8020 22 3 2015 09 23 Managerial overconfidence and audit fees Managerial overconfidence and audit fees 363 384 55660 10.22059/acctgrev.2015.55660 FA Yahya Hasas Yeganeh Associate Professor of Accounting, Faculty of Accounting and Management, Allame Tabatabaei University, Tehran, Iran Masoud Hasani Alghar Instructor of Accounting, Faculty of Humanities, Bozorgmehr University of Qaenat, Qaen, Iran Mohammad Marfou Assistant Professor of Accounting, Faculty of Accounting and Management, Allame Tabatabaei University, Tehran, Iran 0000-0003-4925-7029 Journal Article 2015 05 09 Overconfidence or excessive self-confidence in general can be defined as a groundless belief about individual’s cognitive abilities, judgments and intuitive reasoning. If the auditor recognizes these personality traits in managers and estimates the financial reporting risk to be excessive due to managerial overconfidence, he/she could demand higher audit fees to compensate for the additional audit efforts needed to reduce detection risk. On the other hand, due to the confidence in their firms’ financial reporting process, the overconfident managers choose negotiation as a way to demand less scope and pay lower fees to the auditors. This study aimed to investigate the effect of managerial overconfidence on audit fees. The statistical population consisted of firms listed on the Tehran Stock Exchange during the years 2007 to 2013. The results indicated a significant negative relation between managerial overconfidence and audit fees. The additional studies showed that managerial overconfidence has no significant impact on using industry specialist auditors. Overconfidence or excessive self-confidence in general can be defined as a groundless belief about individual’s cognitive abilities, judgments and intuitive reasoning. If the auditor recognizes these personality traits in managers and estimates the financial reporting risk to be excessive due to managerial overconfidence, he/she could demand higher audit fees to compensate for the additional audit efforts needed to reduce detection risk. On the other hand, due to the confidence in their firms’ financial reporting process, the overconfident managers choose negotiation as a way to demand less scope and pay lower fees to the auditors. This study aimed to investigate the effect of managerial overconfidence on audit fees. The statistical population consisted of firms listed on the Tehran Stock Exchange during the years 2007 to 2013. The results indicated a significant negative relation between managerial overconfidence and audit fees. The additional studies showed that managerial overconfidence has no significant impact on using industry specialist auditors. https://acctgrev.ut.ac.ir/article_55660_428e4a840a0bdd12d309983c53a248a8.pdf