Can investors fully adjust for known biases in manager communications?

Managerial communications often contain biased information because of managerial incentives and other influences. A common assumption in the accounting literature is that if investors are aware of managerial biases, they will be able to fully adjust for those known biases when reacting to managerial communications. Drawing on insights from psychology, I experimentally document that investors are not able to fully adjust for known biases in managerial communications--even when investors know the quantitative amount of the manager's bias. Indeed, investors behave contrary to economic theory as they are unable to fully unravel the effects of known biases when rendering judgments about the firm. My study has implications for researchers, regulators, and investors.

Name thesis:degree_name

Doctor of Philosophy

Level thesis:degree_level

Doctoral

Discipline thesis:degree_discipline

Accounting

Grantor

The University of Texas at Austin

Year dc:date.issued

2012

Author dc:creator

• Smith, James William, 1979-

Advisor dc:contributor.advisor

• Koonce, Lisa Lynn, 1959-

• Financial accounting
• Managerial bias
• Belief bias

Statement dc:rights

• Copyright is held by the author. Presentation of this material on the Libraries' web site by University Libraries, The University of Texas at Austin was made possible under a limited license grant from the author who has retained all copyrights in the works.

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/2152/18036

OAI identifier oai:identifier

oai:repositories.lib.utexas.edu:2152/18036