Higher-Order Beliefs, Market-Based Incentives, and Information Quality

We investigate how interdependence among investors' beliefs affects the reliance on market prices as a performance measure and this in turn firm's preference for financial reporting quality. When investors want to align their values more with other beliefs, optimal contracts become reliant accounting report less price, emphasizing stewardship role of herding market. If baseline quality required by standard is high enough, firm prefers increase its sake contracting efficiency. However, if low, further lowers same reason. The benchmark level that determines whether increases implying it difficult information roles