The Asymmetric Effect of Reporting Flexibility on Priced Risk
成果类型：
Article
署名作者：
Bloomfield, Matthew J.
署名单位：
University of Pennsylvania
刊物名称：
JOURNAL OF ACCOUNTING RESEARCH
ISSN/ISSBN：
0021-8456
DOI：
10.1111/1475-679X.12346
发表日期：
2021
页码：
867-910
关键词：
摘要：
Most firms covary more positively with downmarkets than upmarkets-a phenomenon I refer to as risk asymmetry. I predict and find that risk asymmetry is caused, at least in part, by a firm's ability to selectively obfuscate poor performance. Risk asymmetry decreases significantly when firms are required to adhere to the more stringent auditing standards mandated under Section 404 of the Sarbanes-Oxley Act, however this decrease is more muted for firms with weak internal controls. Consistent with my predictions, these patterns are stronger for more market-sensitive firms and weaker for firms that include relative performance evaluation in their CEOs' pay packages. Taken together with prior literature (which documents that risk asymmetry is priced), my results suggest that a firm can lower its cost of capital by credibly reducing its ability to obfuscate value-relevant information.
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