Sacred values in financial economic decision-making: Experimental evidence
نویسندگان
چکیده
Seminal work in finance and economics has studied theoretical models of ethical behavior. We provide experimental evidence for the role of a universal “sacred value,” namely, truth. We study this value in the context of earnings management, which is an important business setting where the conflict between personal gains and behavior consistent with the value of truth is particularly salient. We ask: First, do managers who treat truth as a sacred value and therefore have a strong commitment to truth forgo monetary gains in favor of telling the truth about the earnings of their firm? Second, do investors prefer to invest into firms to whose CEOs they attribute stronger sacred values? We find strong affirmative answers to both questions, and provide novel evidence on how individual choice varies due to the interaction of values, costs of acting according to values, and the environment. [143 words]
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