The Award Goes to...Joshua Herbold

Joshua Herbold was awarded the Accounting, Behavior and Organizations (ABO) Section Outstanding Dissertation Award. Congratulations Joshua! Joshua earned his Ph.D. at the University of Illinois at Urbana-Champaign.

ABSTRACT
Accounting researchers (e.g., Lundholm 1999; Lev 2003; Glover et al. 2005) and standard-setters (e.g., AICPA 2002; SEC 2002) have suggested that ex post reporting and examination of the accuracy of prior-period accounting estimates may increase investor welfare by increasing the perceived reliability of current-period accounting estimates. In this paper, I experimentally examine two research questions related to decision makers' interpretations of prior-period accounting estimate accuracy disclosures: (1) Are decision makers' interpretations of such ex post reports on prior-period accounting estimate accuracy affected by the properties of the time series observed, and (2) Are decision makers' interpretations of such ex post reports susceptible to biases resulting from directionally motivated reasoning? I hypothesize and find that directionally motivated reasoning moderates decision makers' misconceptions of the properties of noise and bias in the observed sequences of accounting estimate errors, such that potential stockholders are more likely than other decision makers to attribute misestimations to bias, while current stockholders are more likely than other decision makers to attribute misestimations to noise, and that these differences decrease as reasonableness constraints increase.

Dissertation Committee Members:

Mark Peecher (Chairperson)
Marjorie Shelley
Susan Krische
David Budescu