Optimal Reporting Systems With Investor Information Acquisition

This paper analyzes a manager's optimal ex-ante reporting system using a Bayesian persuasion approach (Kamenica and Gentzkow (2011)) in a setting where investors affect cash flows through their decision to finance the firm's investment opportunities, possibly assisted by the costly acquisition of additional information (inspection). I examine how the informativeness and the bias of the optimal system are determined by investors' inspection cost, the degree of incentive alignment between the manager and the investor, and the prior belief that the project is profitable. I find that a mis-aligned manager's system is informative

only when the market prior is pessimistic and is always positively biased; this bias decreases as investors' inspection cost decreases. In contrast, a well-aligned manager's system is fully revealing when investors' inspection cost is high, and is counter-cyclical to the market belief when the inspection cost is low: It is positively (negatively) biased when the market belief is pessimistic (optimistic). Furthermore, I explore the extent to which the results generalize to a case with managerial manipulation and discuss the implications for investment efficiency. Overall, the analysis describes the complex interactions among determinants of firm disclosures and governance, and offers explanations for the mixed empirical results in this area.

Identity Change Impacts Autobiographical Reconstruction of Identity-Relevant Events: Influences of the Self-System on Remembering

The focus on how one is behaving, feeling, and thinking, provides a powerful source of self-knowledge. How is this self-knowledge utilized in the dynamic reconstruction of autobiographical memories? How, in turn, might autobiographical memories support identity and the self-system? I address these questions through a critical review of the literature on autobiographical memory and the self-system, with a special focus on the self-concept, self-knowledge, and identity. I then outline the methods and results of a prospective longitudinal study examining the effects of an identity change on memory for events related to that identity. Participant-rated memory characteristics, computer-generated ratings of narrative content and structure, and neutral-observer ratings of coherence were examined for changes over time related to an identity-change, as well as for their ability to predict an identity-change. The conclusions from this study are threefold: (1) when the rated centrality of an event decreases, the reported instances of retrieval, as well as the phenomenology associated with retrieval and the number of words used to describe the memory, also decrease; (2) memory accuracy (here, estimating past behaviors) was not influenced by an identity change; and (3) remembering is not unidirectional – characteristics of identity-relevant memories and the life story predict and may help support persistence with an identity (here, an academic trajectory).