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Investing in managerial honesty


Gibson, Rajna; Sohn, Matthias; Tanner, Carmen; Wagner, Alexander (2018). Investing in managerial honesty. London: VoxEU.org / CEPR.

Abstract

Corporate fraud and managerial deception have been pervasive and value-destroying in recent decades. This column analyses whether investors form views about a CEO’s honesty based on his or her previous actions, and how this affects investment decisions. A CEO who has resisted, at personal cost, engaging in earnings management is perceived as being more committed to honesty, which appeals to pro­-social investors. Pro-self investors, on the other hand, value honesty when it comes to information regarding investment returns.

Abstract

Corporate fraud and managerial deception have been pervasive and value-destroying in recent decades. This column analyses whether investors form views about a CEO’s honesty based on his or her previous actions, and how this affects investment decisions. A CEO who has resisted, at personal cost, engaging in earnings management is perceived as being more committed to honesty, which appeals to pro­-social investors. Pro-self investors, on the other hand, value honesty when it comes to information regarding investment returns.

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Additional indexing

Item Type:Scientific Publication in Electronic Form
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:5 November 2018
Deposited On:22 Feb 2019 15:53
Last Modified:22 Feb 2019 15:54
Publisher:VoxEU.org / CEPR
OA Status:Closed
Official URL:https://voxeu.org/article/investing-managerial-honesty
Other Identification Number:merlin-id:17199

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