Reputation and Managerial Truth-Telling as Self-Insurance
| Autor: | Robert Heinkel, Adlai J. Fisher |
|---|---|
| Rok vydání: | 2008 |
| Předmět: |
Consumption (economics)
Economics and Econometrics Strategy and Management media_common.quotation_subject Self-insurance Variance (accounting) General Business Management and Accounting Insider Microeconomics Management of Technology and Innovation Honesty Economics ComputingMilieux_COMPUTERSANDSOCIETY Cash flow Business Private information retrieval Reputation media_common |
| Zdroj: | Journal of Economics & Management Strategy. 17:489-540 |
| ISSN: | 1530-9134 1058-6407 |
| DOI: | 10.1111/j.1530-9134.2008.00185.x |
| Popis: | We investigate truth-telling by an informed insider, or manager, who repeatedly forecasts cash flows to competitive investors in a standard message game. The insider cannot trade on or sell private information, but faces imperfectly hedgeable nonwage income shocks. When compensation depends on the current stock price, a partially revealing equilibrium may exist in which the manager manipulates his reports, and hence the stock price, to reduce consumption variance. Intuitively, the manager builds reputation in good times when honesty is affordable, and exploits reputation in times of need. Endogenous reputation for honesty thus follows from a self-insurance motive. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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