Analysts and the financial press are often accused of paying too much attention to one another, instead of providing their own independent analyses of fundamental information. Prior research suggests that such mutual observation can render consensus forecasts too extreme, more redundant, and...

This paper reports the results of an experiment showing that investors' forecasts of earnings are affected by the investment positions they hold and by whether they are facing the prospect of a gain or loss on those investments. The results are consistent with theories of motivated reasoning...

Two experiments with MBA-student participants support Barberis, Shleifer, and Vishny's (1998) prediction that investors expect random-walk sequences to shift between continuation regimes (in which changes tend to be followed by like changes) and reversal regimes (in which changes tend to be...

SEC Chairman Arthur Levitt recently called on investors to discourage firms' earnings management by expecting reliable reporting and punishing deceptive reporters (Levitt 1998a, 1999). This paper presents a game-theoretic model in which such punishments can induce managers to develop reputations...

We examine how clawback provisions and board monitoring affect managers' use of discretion to achieve earnings targets. Using an experiment, we find that when board monitoring is weak, imposing clawback provisions has little impact on the total amount of earnings management activity. This null...

We survey a broad group of professionals who use financial statements as part of their job to assess the extent to which they believe financial reports suffer from disclosure overload. Consistent with the claims made by regulators, auditors, and preparers, we find that a significant portion of...

This study reports the results of two experiments that re-examine how preferences for honesty affect managers' excessive consumption of firm resources. In our investor-manager investment game, if the investor chooses to invest, the manager privately observes production costs, chooses his or her...

We use two experiments to investigate how incentive scheme and task structure influence creative incubation in a multitask environment where participants perform both creative and simple routine tasks. In our first experiment, where participants are given the discretion to switch between a...