Reporting Bias

41 Pages Posted: 13 Sep 1998

See all articles by Paul E. Fischer

Paul E. Fischer

University of Pennsylvania - Accounting Department

Robert E. Verrecchia

University of Pennsylvania - Accounting Department

Date Written: July 1998

Abstract

In this paper we study the bias a manager introduces into reports of firm performance when the market is uncertain about the manager's objectives. Comparative static results suggest that the information content of the manager's report falls as the cost of biasing reports falls, or uncertainty about the manager's objective increases. As an extension and application of our analysis, we consider the effect of an interim reporting requirement on end-of-period reporting bias, end-of-period price efficiency, and the manager's welfare.

JEL Classification: M41, M43, G14, D82

Suggested Citation

Fischer, Paul E. and Verrecchia, Robert E., Reporting Bias (July 1998). Available at SSRN: https://ssrn.com/abstract=126369 or http://dx.doi.org/10.2139/ssrn.126369

Paul E. Fischer (Contact Author)

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Robert E. Verrecchia

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-6976 (Phone)
215-573-2054 (Fax)

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