This research examines internal causes of overproduction in manufacturing firms. Using a sample of manufacturing firms (SIC codes 2000-3999) in the US from 2006 to 2015, we find that firms’ overproduction is positively related to excess fixed assets investment in current period and sales in past periods. We attribute our findings to the fact that the noise in the internal accounting information used in financial and operating decisions can drive the mismatch between production and demand. The current literature on overproduction mostly focuses on external financial accounting incentives, whereas this study adds evidence of internal accounting information driving overproduction as another explanation.