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The purpose of this paper is to examine the effect of chief executive officer (CEO) overconfidence on earnings quality and the moderating role of ownership structure as a crucial corporate governance device.

The paper uses the generalized method of moments (GMM) estimation method to test our models on a sample of 335 French companies between 2009 and 2020, i.e. 4,020 observations.

The results show that CEO overconfidence negatively affects earnings quality. This result supports the predictions of behavioral finance theory and suggests that CEO overconfidence is a behavioral bias that affects the quality of earnings. The authors also examined the effect of different types of ownership structures on this relationship. The results show the significant role of controlling shareholders, owner-managers, families and institutional investors in mitigating the negative effect of CEO overconfidence on earnings quality.

This paper has some limitations. First, other types of ownership structures could have been analyzed such as state ownership. Second, we ignored the role of the board of directors as an important governance mechanism in controlling overconfident CEOs’ actions.

Companies should be aware of the potential risks associated with CEO overconfidence, which can compromise the faithful representation of earnings. This highlights the importance of effective monitoring and internal controls to detect and prevent such practices, which involve the role of ownership structure.

This paper addresses the effect of CEO overconfidence on earnings quality and provides new evidence on the role of different ownership structure types in shaping this relationship. Additionally, this paper sheds new light on how overconfident CEOs may behave in challenging times.

This paper examines the influence of accounting practices on financial performance with an application to farms. In response to the yield, price and weather risks they face, farms have strong incentives to manipulate their earnings.

We measure earnings management and performance using data from the Farm Accountancy Data Network (FADN), which is representative of French professional farms over the period 2000–2022.

Our results show that, on average, regardless of year and specialisation, farms use two competing strategies to manage their earnings and deal with uncertainty. In the short run, timely reporting of bad news can help them to access public support. In the long run, farms also smooth their earnings, which is justified by the need to maintain their access to credit and to cope with climatic and economic shocks.

Further research could provide more precise evidence of the impact of climatic, geopolitical or market events on farm accounting practices. In addition, the analysis could be extended to other industries that are also exposed to risks.

The results shed new light on the observed volatility in farm profitability and their ability to manage risk. Accounting practices play an important role in helping farmers to cope with risky production and volatile market conditions. While farmers may appear to be in a difficult situation due to reduced and low-quality earnings, we believe that they are in fact resilient in ensuring the sustainability of their operations and financing.

This work highlights the key role of earnings management in risk management. Farms are a relevant example of small- and medium-sized enterprises (SMEs) exposed to natural and economic risks.