New research challenges the accepted wisdom that shunning companies that fail to meet your values puts pressure on them or puts them out of business.
Leaders must focus on implementing ideas, taking action, and making the transition to clean energy part of their core business strategy.
Advice to the Next US President: Accounting
Investing in Times of (the Coronavirus) Crisis
In a dynamic setting with demand following a random process, we ask how investment and operating decisions can be delegated to a manager with unknown time preferences. Only the manager observes the demand realization in each period and, therefore, has private information when choosing whether to acquire the productive asset and, subsequently, how to utilize it. We derive accrual accounting-based performance measures under which the manager will make the efficient decisions provided the investment date is exogenously given.
This paper examines the impact of mandatory reporting and auditing of firms' financial statements on industry-wide resource allocation. Using threshold-induced variation in the share of mandated firms in a given industry, I document that reporting mandates facilitate ownership dispersion in capital markets and spur competition in product markets. I, however, do not find that reporting mandates unambiguously improve the efficiency of industry-wide resource allocation. With respect to auditing mandates, I find only that they impose a fixed cost on firms, deterring smaller entrants.