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Self-serving behavior in managers' discretionary information disclosure decisions

Article Abstract:

The display of self-serving behavior by managers when making discretionary information production decisions is tested in discretionary information disclosure decisions, particularly in the common stock return performance comparisons that are required in corporate proxy statements. An observed downward bias in industry and peer-company stock return benchmarks reflects an overstatement of relative reporting-firm performance. The extent of the bias varies with important reporting-firm attributes, including company performance and the firm ownership structure's character.

Beliefs, opinions and attitudes, Executives

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Earnings and price-based compensation contracts in the presence of discretionary trading and incomplete contracting

Article Abstract:

A study was conducted on the use of reported earnings and prices as compensation measures of corporate performance when the firm manager is able to trade on private information. Results showed that the influence of reported earnings on the managerial contract depends on whether the price is based on observable information about the manager's efforts. It was also determined that the optimal weights in the managerial linear compensation contract do not vary in a monotonic and easily characterizable approach to changes in exogenous parameters.

Compensation management, Management contracts

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Corporate responses to segment disclosure requirements

Article Abstract:

A multi-division incumbent firm's incentives to choose an accounting method and make supplementary disclosures in the presence of multiple users of the company's disclosures are discussed. The imposition of additional disclosure requirements may lead to a strict reduction of the incumbent's value-relevant disclosures, since the incumbent responds to the additional disclosure requirements by opting for an accounting method that masks proprietary information.

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