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Research Article

CEO Overconfidence and Voluntary Tax Disclosures in Sustainability Reports

Mahsa Behnamrad1 · Keumah Jung1 · Jaehee Jo2

1 Seoul National University, 2 Soongsil University

Published: January 2026 · Vol. 55 No. 2 · pp. 675-703

DOI: https://doi.org/10.17287/kmr.2026.55.2.675

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Abstract

We examine how CEO overconfidence influences firms' tax disclosures in sustainability reports. Using an option-based measure of overconfidence, we find that firms led by overconfident CEOs are more likely to disclose tax-related information. These disclosures also tend to include more optimistic language, suggesting that overconfident CEOs use them as impression management tools to enhance stakeholder perceptions of corporate tax practices. The effect of CEO overconfidence on tax disclosure is more pronounced for firms that engage in greater tax avoidance, as overconfident CEOs use tax disclosures to legitimize their aggressive tax strategies. The effect is also stronger for firms with higher foreign income, reflecting overconfident CEOs' efforts to project competence in managing complex international tax matters. Additionally, overconfident CEOs with longer tenure are more likely to include tax-related information in sustainability reports, as they perceive tax disclosures as a means to preserve their legacy and signal a long-term commitment to tax transparency. Overall, our study sheds light on the interplay between CEO overconfidence and voluntary tax disclosures, offering valuable insights for policymakers and readers of sustainability reports.
Keywords: CEO OverconfidenceVoluntary Tax DisclosuresSustainability ReportingTextual Analysis