ICEF Research Seminar by Alexander Wagner (University of Zurich)

On Thursday, April 5 at 4.40 pm, room 3211 (Shabolovka str. 26) ICEF held the Research Seminar.
Speaker: Alexander Wagner (University of Zurich)
Theme: "Investing in Managerial Honesty" joint with Rajna Gibson, Matthias Sohn and Carmen Tanner

Abstract: Two laboratory experiments show that investors perceive a CEO to be more committed to honesty when the CEO resisted, at a personal cost, engaging in earnings management. A one standard deviation higher CEO’s perceived commitment to honesty compared to another CEO reduces the relevance, for investment decisions, of differences between the CEOs’ claimed future returns by 40%. This interaction effect is prominent among investors with a pro-self orientation. To pro-social investors, their own honesty values and those attributed to the CEO matter directly, not through the returns. Overall, CEO honesty matters to different investors for distinct reasons.

 

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ICEF seminars