MENU

You are here

Dissertations

Analyst reputation, communication and information acquisition

Xiaojing Wang, 2012
Faculty Advisor: Tim Baldenius

Abstract

Strategic information transmission models, also called cheap talk models, have become increasingly popular in accounting, as they have successfully brought new insights to various accounting topics. This dissertation consists of two chapters, each analyzes a model of strategic information transmission between an expert and a decision maker.

In the first chapter, I study how reputational concerns affect analysts' incentives to invest in information acquisition, and subsequently, their strategic communication with investors in form of "repeated cheap talk". In a setting where analysts' incentives may be misaligned with the investors in a particular fashion (i.e. biased towards issuing optimistic reports), an equilibrium exists in which only aligned analysts will acquire information. As a result, investors may favorably update their beliefs about the analysts' type (as being aligned) when the report is consistent with the realized state. Hence reputational concerns serve as a disciplining device to curb analysts' opportunistic behavior, consistent with economic intuition. This is in sharp contrast to earlier studies that have treated information as exogenous and identical, in which case reputational concerns may work against informative communication.

The second chapter is based on joint work with Tim Baldenius and Nahum Melumad. In this work, we study the optimal board composition--of monitoring and advisory "types"--within a framework of strategic communication between the CEO and the board when the CEO is an empire builder. The board of directors performs the dual role of monitoring and advising the firm's management. At times, it makes certain key decisions itself. A major concern regarding the effectiveness of boards is CEO power, in particular as it relates to the board nomination process and CEO entrenchment. Monitoring types on the board aim to uncover information known to the CEO, whereas advisors aim to uncover incrementally decision-relevant information. Successful board monitoring allows for selective intervention even if authority is formally delegated to the CEO. Counter to conventional wisdom, we show that powerful CEOs, who influence the board nomination process, may in fact prefer more monitors on the board than do shareholders. Regulatory interventions (such as the Sarbanes-Oxley Act) that attempt to strengthen the monitoring role of boards may thus be harmful in precisely those cases where agency problems are severe. Lastly, to prevent that CEOs entrench themselves by choosing "complex" projects, shareholders may want to commit to an advisor-heavy board.

Application Deadlines

Master of Science in Marketing >

For Fall 2016 Entry:

Available: August 1st, 2015
Deadline: January 4th, 2016

 

Master of Science in Financial Economics >

For Fall 2016 Entry:

Available: August 1st, 2015
Deadline: January 4th, 2016

 

Master of Science in Management Science and Engineering >

For Fall 2016 Entry:
To be determined

 

Available 8/1/15
Sept 2016

Doctoral
Deadline: 01/05/16

MS Marketing
Deadline: 01/04/16

MS Financial Economics
Deadline: 01/04/16

 

Doctoral Program News

Young Alumni Balseiro wins George B. Dantzig Dissertation Award

At the 2014 Informs national meeting, Santiago Balseiro was honored for his work in "Competition and Yield Optimization in Ad Exchanges". We congratulate Santiago on his accomplishment.

Read More Here

Ethan Rouen wins Deloitte Doctoral Fellowship in Accounting

The Deloitte Foundation has awarded $25,000 grants to 10 top accounting Ph.D. candidates through the Deloitte Foundation’s annual Doctoral Fellowship program. Given to students who plan to pursue academic careers upon graduation, the award will support the 2015 recipients’ final year of coursework and the subsequent year to complete their doctoral dissertation.

Read More Here

Honigsberg featured in Ideas at Work

The August issue of Ideas at Work features research that doctoral candidate Colleen Honigsberg led in conjunction with Sharon Katz.

Read More about Colleen

Wazlawek featured in Ideas at Work

Abbie Wazlawek's joint research with Professor Daniel Ames is featured in the June 24th, 2014 edition of Ideas at Work

Read More about Abbie

Ethan Rouen featured in Ideas at Work

Ethan Rouen's joint research with Professor Dan Amiram is featured in the May 15th, 2014 edition of Ideas at Work

Read More about Abbie

Rivas Wins Fellowship

The PhD program is proud to congratulate Miguel Duro Rivas, who was awarded the Nasdaq Educational Foundation Doctoral Dissertation Fellowship.

Read More about Miguel

Wong wins Deloitte Fellowship

We are proud to announce that Yu Ting (Forester) Wong is one of the recipients of the 2014 Deloitte Foundation Doctoral Fellowship in Accounting.

Read More About Yu Ting >

The PhD Program Congratulates John Yao

PhD student John Yao was a finalist in the 2013 M&SOM (Manufacturing & Service Operations Management) student paper competition.

Read More About John >

Honigsberg Named Postdoctoral Fellow

The PhD program is proud to congratulate Colleen Honigsberg, who was named the Postdoctoral Fellow in Corporate Governance at the Millstein Center at Columbia Law School in October 2013

Read More about Colleen >

 

Check Application Status

Students listening to classroom lecture

Once you've submitted your application, you can login and track your status by using the link below.

Check Status