Publication in Review of Managerial Science

We are excited to share that our AccSus member Anna Rohlfing-Bastian and our former PhD student Lisa Knacker published their paper on "Strategic presentation of mandatory disclosures” in Review of Managerial Science.

In corporate reporting, not all information is equally verifiable. While hard information is often regulated and observable, soft and forward-looking information leaves room for managerial discretion, especially in how it is presented.

The paper examines how managers strategically use tone in mandatory disclosures when investors learn from past reporting behavior. The authors develop a model that predicts that tone choices are shaped by managerial incentives, internal controls, soft information, and the market’s response to previous disclosures.

A key insight: when compensation is strongly tied to firm value and internal controls are weak, managers may adopt excessively biased tones. Stronger internal controls can mitigate this risk, but only if they are aligned with incentive structures.

This matters increasingly as ESG reporting becomes mandatory, especially when executive pay is linked to ESG metrics!

Find the open-access paper here: rdcu.be/fsjP2