Prior research argues that sequential decisions lead to a slippery slope toward unethical or fraudulent behavior, with little evidence to support such claims. We conduct two experiments which demonstrate the existence of the slippery slope in a controlled setting, and investigate how it leads...

This paper shows that an important link between investor sentiment and firm overvaluation is optimistic earnings expectations, and that management earnings guidance aids in resolving sentiment-driven overvaluation. Using the firm characteristics identified by Baker and Wurgler (2006), we find...

Prior literature finds that short selling is beneficial to the market because it increases liquidity and helps to discipline optimistic market prices. In this paper we use two controlled experiments to examine the potential for an unintended consequence of allowing short selling or easing short...

In this paper, we examine the growing number of behavioral studies of how financial reporting, auditing, and other corporate governance regulations affect earnings management and accounting choice-related decisions of managers, auditors, and directors. We first describe how experimental and...

We investigate the effect of CFO narcissism, as measured by signature size, on financial reporting quality. Experimentally, we validate that narcissism predicts misreporting behavior, and that signature size predicts misreporting through its association with narcissism. Empirically, we examine...

Prior research finds that individuals struggle to detect deception at rates better than chance, and that this extends to accounting settings where users evaluate the veracity of management's claims. However, these findings relate to settings where individuals make conscious judgments about...

Using the size of CEO signatures in SEC filings to measure individual narcissism, we find that it is associated with several negative firm outcomes. We first validate signature size as a measure of narcissism but not overconfidence using two laboratory studies, and also find that our measure is...

Causal reasoning involves understanding the cause of events that have already happened (i.e., diagnosis) as well as predicting which future events will occur (i.e., prediction). Although this type of reasoning is an important part of financial reporting and voluntary disclosure, very little...

Causal reasoning involves understanding the cause of events that have already happened (i.e., diagnosis) as well as predicting which future events will occur (i.e., prediction). Although this type of reasoning is an important part of financial reporting and voluntary disclosure, very little...

We investigate the effect of CFO narcissism, as measured by signature size, on financial reporting quality. Experimentally, we validate that narcissism predicts misreporting behavior, and that signature size predicts misreporting through its association with narcissism. Empirically, we examine...