Presenter: Anders Merrild Posselt, AU 

Title: Anomaly demand

Presenter: Nikolaj Niebuhr Lambertsen, AU

Title: Manipulative overconfidence and the cost of unbiased reporting

Abstract: I study earnings management in an agency setting where the agent is overconfident in his ability to manage earnings, and the principal may induce the agent to communicate earnings truthfully. Without communication, overconfidence causes an increase in earnings management and incentive pay and and may lead to a Pareto decrease in social welfare. Through communication, the principal can deter earnings management, and overconfidence increases the agent’s total compensation at the expense of firm value. When the agent becomes significantly overconfident, communication loses value, and this causes a spike in earnings management.

Organizers: Stefan Hirth and Anders Merrild Posselt