41 Pages Posted: 13 Sep 1998
Date Written: July 1998
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: Suggested Citation