Financial reporting and moral sentiments

Scholars have long suspected that people behave differently when their actions will be observed by or revealed to others. We hypothesize financial reporting reveals managers' lead managers take better align with investor interests. test this hypothesis an experiment in which we manipulate the availability of a report managerial actions. Our evidence shows leads manager choose reinvestment and resource-sharing interests, even can impose no cost confer reward on manager. This effect holds shut down firm sizable portion assets. suggests reporting's economic value comes not only from its traditional contracting function, but also because care about investors' moral evaluations them are enabled reporting.