CEO overconfidence and IRS attention

We examine the likelihood that US Internal Revenue Service (IRS), in its enforcement role, will accord particular attention to firms are managed by CEOs who exhibit over-confidence, given such may be more aggressive their tax policies and strategies. Using data from 7757 firms, we find this is indeed case. Such even pronounced instance of overconfident whose financially constrained and/or distressed. also IRS has augmented audit processes give during post financial crisis. This due increased vulnerability external shocks, which consequently increases incentives embark on avoidance strategies, value-destroying investments, highly biased reporting (and forecasting responses) authorities. Our results robust after accounting for possibility endogeneity using a wide range specifications, measures, econometric models.