 The effects of a reasonable investor perspective and firm's prior disclosure policy on managers' disclosure judgmentsDiane Mayorga and Ken T. Trotman Accounting, Organizations and Society, 2016, vol. 53, issue C, 50-62 Abstract: Security laws and accounting standards suggest that reasonable investors' expectations are an important consideration for disclosure judgments. Regulators have expressed concerns that many disclosure judgments are made without adequate consideration of how investors would evaluate the information. However, the psychological literature suggests that individuals may face difficulties considering the facts from another's perspective. We conduct two experiments to examine whether prompting managers to take the perspective of a reasonable investor affects their disclosure recommendations of a probable negative change in their company's earnings expectations, and whether this effect is impacted by the firm's prior disclosure policy (known that its past preference to be biased towards no disclosure versus unknown). We find that experienced managers are more likely to recommend disclosure when they are prompted to take the perspective of a reasonable investor than when they are not and this effect is stronger when the firm's prior disclosure policy is unknown. Keywords: Disclosure policy; Perspective taking; Reasonable investor; Reasonable person (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:aosoci:v:53:y:2016:i:c:p:50-62 DOI: 10.1016/j.aos.2015.10.003 Access Statistics for this article Accounting, Organizations and Society is currently edited by Christopher Chapman More articles in Accounting, Organizations and Society from Elsevier |
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