An information-based model for the differential treatment of gains and losses

• 成果类型: Article
• 署名作者: Nagar, Venky; Rajan, Madhav V.; Ray, Korok
• 署名单位: University of Michigan System; University of Michigan; University of Chicago; Texas A&M University System; Texas A&M University College Station
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-018-9443-5
• 发表日期: 2018
• 页码: 622-653
• 关键词: PROSPECT-THEORY; positive research; conservatism; ECONOMICS; incentives; experience; EFFICIENCY; EVOLUTION; FIRMS; GAAP

摘要

This study defines reporting conservatism as a higher verification standard for probable gains compared to losses and builds a model that endogenously generates optimal behavior resembling an asymmetric preference for gains versus losses. Our model considers the setting where one party produces a resource and another tries to expropriate it. The key factor determining the extent of the gain-loss asymmetry is the level of information asymmetry or trust between the two parties. The information asymmetry-based results of our model provide a simpler explanation for the vast empirical literature on conservatism, where the bulk of the economic relationships among the parties appear to be information-based with little direct relation to explicit debt contracts, a factor that has been the focus of theoretical arguments. We also suggest new empirical analyzes.