Download This PaperSignaling and Accounting Information
38 Pages Posted: 25 May 2006 Last revised: 24 Sep 2022
Date Written: December 1989
Abstract
This paper develops a signaling model in which accounting information improves real investment decisions. Pure cash flow reporting is shown to lead to underinvestment when managers have superior information but are acting in shareholders' interests. Accounting by prespecified, "objective" rules alleviates the underinvestment problem.
Suggested Citation: Suggested Citation
Myers, Stewart C., Signaling and Accounting Information (December 1989). NBER Working Paper No. w3193, Available at SSRN: https://ssrn.com/abstract=227289
Stewart C. Myers (Contact Author)
Massachusetts Institute of Technology (MIT) ( email )
Sloan School of Management
Cambridge, MA 02142
United States
617-253-6696 (Phone)
617-258-6855 (Fax)
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