Financial reporting quality and the quiet Life by Mihir N. Mehta.

Bertrand and Mullainathan (2003) find that managers shielded from the threat of takeovers exert less effort to maximize firm value, consistent with a 'quiet life' hypothesis. I study whether the governance role of financial reporting can mitigate adverse effects arising from managerial preferences for a quiet life. I hypothesize and find evidence that after changes in the mid 1990's to Delaware's takeover protection regime, Delaware firms with higher financial reporting quality (FRQ) have better operating performance and higher capital investment intensity. Furthermore, the above relation between FRQ and performance is stronger for firms operating in less competitive industries, and firms with staggered boards. Overall, the results suggest that financial reporting can help mitigate adverse effects associated with managerial preferences for a quiet life.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2010

Author dc:creator

• Mehta, Mihir N. (Mihir Nandkishore)

Advisor dc:contributor.advisor

• S.P. Kothari and Joseph P. Weber.

• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/67213

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/67213