Private Learning and Reporting Bias

Abstract

During which part of a manager's tenure should we expect her to bias reporting most? If she (a) learns about the quality of her firm gradually and (b) cannot perfectly communicate her findings to the market, the weight that the market places on her reporting is hump-shaped in time. If her shares vest on a known date, her bias increases steadily over time, reaching its maximum on the vesting date. If the vesting date is not perfectly known, her bias peaks in the middle of her tenure.

Keywords: dynamic reporting, bias, learning-by-doing, vesting

JEL Classification: C11, D83, G14, M41