A5017096360- Auditing, Earnings Management, Governance
- Corporate Finance and Governance
- Financial Markets and Investment Strategies
- Auction Theory and Applications
- Game Theory and Applications
- Corruption and Economic Development
- Higher Education Governance and Development
- Risk Management in Financial Firms
- Experimental Behavioral Economics Studies
- Economic theories and models
- Banking stability, regulation, efficiency
- Opinion Dynamics and Social Influence
New Economic School
2023-2024
HEC Paris
2015-2022
Université Paris 1 Panthéon-Sorbonne
2018
Northwestern University
2017
ABSTRACT Does managing the production of information add value in economic environments where a manager may claim to be uninformed and withhold unfavorable news? We examine this question by nesting an optimal persuasion mechanism, controlling how evidence is organized, within voluntary disclosure framework. Information has productive consequences because firm uses it make continuous operating decision. The reporting strategy features coarse at most reported event if only bears penalties for...
ABSTRACT We study the impact of asymmetric (i.e., conservative or aggressive) disclosure on a firm’s price in classic setting which its stock is traded by risk-averse investors and noise liquidity traders. show that accounting policies alter relative risk faced when they short versus long, causes market to differ for positive negative demand shocks. As result, conservatism raises firms’ valuations lowers their expected returns. further demonstrate relationship between informativeness returns...
ABSTRACT Firms sometimes obtain soft private information about growth prospects along with hard current or past performance. In this environment, we find that optimizing disclosures over multiple periods yields nonlinear stock price reactions following both voluntary and mandatory disclosures. Further, derive several predictions distinct short‐run long‐run effects of nondisclosures on security prices. Under specified conditions, when the volatility firm's earnings increases, average...
ABSTRACT Using misstatement data, we find that the distribution of detected fraud features a heavy tail. We propose theoretical mechanism explains such relatively high frequency extreme frauds. In our dynamic model, manager manipulates earnings for personal gain. A monitor uncertain quality can detect and punish manager. As fails to fraud, manager's posterior belief about monitor's effectiveness decreases. Over time, learning leads slippery slope, in which size frauds grows steeply, power...
How precise should accounting measurements be, if management has discretion to strategically withhold? We examine this question by nesting an optimal persuasion mechanism, which controls what are conducted, within a voluntary disclosure framework la Dye (85) and Jung Kwon (1988). In our setting, information real effects because the firm uses it make continuous operating decision, increasing in market's belief. Absent frictions other than uncertainty about endowment, we show that imprecision...
We study the optimal disclosure policy of a firm that wishes to maximize its expected stock price in classic setting which is traded by risk-averse investors and noise traders. The imprecise leads skewed posterior beliefs. This subjects short positions tail risk, causing demand large increase absorb noise-trader purchases leading overvaluation. Despite providing purely firm-specific information, this impacts firm's returns. further show can inflate even when restricted simple policies...
ABSTRACT We study the effects of disclosure in a dynamic market with imperfect competition. The supply an asset is determined by large shareholder price impact, who trades slowly to diversify away from concentrated ownership. Small investors provide capital and thus risk-bearing capacity market. Although it well known that impedes risk sharing shifting before future trading opportunities, we show disclosure, at same time, can enhance promoting more trades. Resolving this tradeoff, interior...
We study the consequences of misreporting in settings where ambiguity-averse investors face uncertainty about two aspects firm: its productivity and weakness reporting system. show that joint presence these sources distorts firm’s investment choices opposing ways, leading to overinvestment by large firms (to signal productivity) underinvestment small system is not weak). Our analysis suggests regarding affects both level market-to-book ratio association with firm size. In addition, we that,...
We study social learning in a sender-receiver environment which speakers may be attacked for challenging the orthodoxy. show that “cancellations” do not emerge equilibrium unless there is fraction of ‘zealots’, namely receivers who derive utility from attacking dissenters. Cancellations as means to deter future dissenters and thus influence learning. By suppressing dissent, thereby preventing information transmission, attackers are able manipulate decision making process. Surprisingly,...
We develop a mechanism explaining the emergence of heavy tails in distribution detected frauds. In our model, manager manipulates earnings for private benefit and updates her belief about monitoring quality over time, perceiving monitor to be increasingly less effective as frauds remain undetected. The learning process leads slippery slope, whereby fraud size increases time. Using misstatements data, we show that empirical is consistent with power law provide support slope channel....
We develop a unified treatment of broad class truthful disclosure games. Such games have, at most, one equilibrium that is reasonable given commonly used signaling refinement. provide simple algorithm to construct the unique strategy and beliefs, identify necessary sufficient conditions for existence. This approach applies multidimensional verifiable with arbitrary costs or information endowments. prove following conjecture: regulation commits sender providing more precise reduces welfare in...
Firms sometimes obtain soft private information about growth prospects along with hard current or past performance. In this environment, we find that optimizing disclosures over multiple periods yields nonlinear stock price reactions following both voluntary and mandatory disclosures. Further, derive several predictions distinct short-run long-run effects of nondisclosures on security prices. Under specified conditions, when the volatility firm’s earnings increases, average contemporaneous...