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dc.contributor.advisorZardkoohi, Asghar
dc.creatorChakrabarty, Subrata 1979-
dc.date.accessioned2015-10-29T18:47:54Z
dc.date.available2015-10-29T18:47:54Z
dc.date.created2009-08
dc.date.issued2009-06-24
dc.date.submittedAugust 2009
dc.identifier.urihttp://hdl.handle.net/1969.1/155365
dc.description.abstractTop executives sometimes attempt to create information asymmetry through corporate reporting manipulation. In the United States, one method was not to report financials in certain quarters (this was a legal option before 1970), and a second method is to report inaccurate financials (which has been a major concern in the 1990s-2000s). This study argues that when cognitive bias of loss aversion is high, a firm?s risk can induce such attempts to create information asymmetry. This argument is based on prospect theory's loss aversion axiom, which states that people psychologically weigh losses more strongly than equivalent gains. In this study, a firm's risk is theoretically operationalized using independent variables of firm-specific risk (firm's unsystematic risk as assessed by stock market) and default risk (difficulty the firm faces in meeting its debt market obligations). Correspondingly, loss aversion is theoretically operationalized using moderator variables of institutional ownership concentration (as an indicator of shareholder resistance to loss aversion) and top executive in-the-money stock options to salary ratio (as an indicator of personal wealth that is exposed to loss if a firm approaches bankruptcy). Hypotheses are tested using data collected for a 6 year period from 1964 to 1969 and for a 9 year period from 1997 to 2006. Findings suggest that when cognitive bias of loss aversion is high, firm-specific risk in stock market and default risk in debt market may cause top executives to be fearful of reporting bad news, tempting them to create information asymmetry as a result. An implication is that the encouragement of risk (as recommended by agency theory) without factoring in the role of loss aversion (as highlighted by prospect theory's loss aversion axiom) can be counterproductive.en
dc.format.mimetypeapplication/pdf
dc.subjectCompensationen
dc.subjectQuarterly reportingen
dc.subjectAnnual reportingen
dc.subjectInaccurate reportingen
dc.subjectSarbanes Oxleyen
dc.subjectScandalsen
dc.subjectFraudulent reportingen
dc.subjectFrauden
dc.subjectManipulationen
dc.subjectCEO turnoveren
dc.subjectsuccessionen
dc.subjectEconomic crisisen
dc.subjectFinancial crisisen
dc.subjectCredit crisisen
dc.subjectEvent studyen
dc.subjectOLS regressionen
dc.subjectTobin regressionen
dc.subjectTobit regressionen
dc.subjectLogistic regressionen
dc.subjectMatched samplingen
dc.subjectInteractionen
dc.subjectDisordinalen
dc.subjectCrossoveren
dc.subjectStrategyen
dc.subjectStrategic managementen
dc.subjectManagementen
dc.subjectCompetitive advantageen
dc.subjectCorporate governanceen
dc.subjectLeadershipen
dc.subjectEthicsen
dc.subjectReportingen
dc.subjectRestatementsen
dc.subjectAgency theoryen
dc.subjectProspect theoryen
dc.subjectInstitutional theoryen
dc.subjectInformation Asymmetryen
dc.subjectMoral hazarden
dc.subjectAdverse selectionen
dc.subjectLoss aversionen
dc.subjectRisken
dc.subjectFirm specific risken
dc.subjectUnsystematic risken
dc.subjectDefault risken
dc.subjectBankruptcy risken
dc.subjectCrediten
dc.subjectCreditorsen
dc.subjectDebten
dc.subjectDebtorsen
dc.subjectTop Managementen
dc.subjectTop executiveen
dc.subjectCEOen
dc.subjectOwnershipen
dc.subjectInstitutional ownershipen
dc.subjectInstitutional ownership concentrationen
dc.subjectInstitutional regulationsen
dc.subjectPublic policyen
dc.subjectStock optionsen
dc.subjectIn the moneyen
dc.titleFear of Reporting Bad News: Why Risk and Loss Aversion Can Tempt Top Executives to Create Information Asymmetryen
dc.typeThesisen
thesis.degree.departmentManagementen
thesis.degree.disciplineManagementen
thesis.degree.grantorTexas A & M Universityen
thesis.degree.nameDoctor of Philosophyen
thesis.degree.levelDoctoralen
dc.contributor.committeeMemberHitt, Michael A
dc.contributor.committeeMemberIreland, R D
dc.contributor.committeeMemberPaetzold, Ramona L
dc.contributor.committeeMemberFraser, Donald R
dc.type.materialtexten
dc.date.updated2015-10-29T18:47:54Z


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