Can ethics be taught? Evidence from securities exams and investment adviser misconduct

Kowaleski, Zachary T; Sutherland, Andrew; Vetter, Felix

doi:10.1016/j.jfineco.2020.04.008

Cited by 36 publications

(11 citation statements)

References 32 publications

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“…Last, our findings add to the growing work concerned with BD misconduct (Dimmock and Gerken, 2012;Egan et al, 2017Egan et al, , 2019Dimmock, Gerken, and Graham, 2018;Honigsberg and Jacob, 2018;Parsons, Sulaumen, and Titman, 2018;Charoenwong, Kwan, and Umar, 2019;Kowaleski, Sutherland, and Vetter, 2019;Law and Mills, 2019). Recent work shows that financial misconduct not only involves direct losses to investors, but also has real effects on investor participation in the stock market (Gurun, Stoffman, and Yonker, 2017).…”

Section: Introductionsupporting

confidence: 55%

Auditors are known by the companies they keep

Cook¹,

Kowaleski

Minnis

et al. 2020

Journal of Accounting and Economics

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Section: Introductionsupporting

confidence: 55%

Auditors are known by the companies they keep

Cook¹,

Kowaleski

Minnis

et al. 2020

Journal of Accounting and Economics

Self Cite

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“…In addition, it appears that training matters. Kowaleski et al (2020) study the effects of a change in the investment adviser qualification exam and report that individuals passing the exam with more rules and ethics coverage are less likely to commit misconduct. Finally, there is evidence suggesting that discrimination based on gender and race/ethnicity exists in the financial advisory industry.…”

Section: Regulators and Intermediariesmentioning

confidence: 99%

Behavioral Economics of Accounting: A Review of Archival Research on Individual Decision Makers*

Hanlon

Yeung

Zuo

2021

Contemporary Accting Res

111

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This paper develops a unified framework to synthesize the growing stream of positive research on the role of individual decision makers in shaping observed accounting phenomena. This line of research recognizes two central ideas in behavioral economics. First, individual behavior depends not only on economic incentives and accessible information but also on individual preferences, abilities, experiences, and other characteristics. Second, the constraints that structure human interactions encompass both formal institutions (e.g., rules, laws, constitutions) and informal institutions (e.g., norms, conventions, rituals). Our review covers a broad set of individuals who are of interest in accounting research: managers, directors, audit partners, analysts, standard setters, politicians, judges, journalists, loan officers, financial advisors, and investors. We aim to understand the systematic effects of individual characteristics on a wide spectrum of accounting phenomena, including financial reporting, disclosure, tax planning, auditing, and corporate social responsibility. We highlight the importance of personal characteristics not only for an individual's own behavior but also for others' perceptions. Our review mainly focuses on archival research in accounting and provides some thoughts about opportunities for archival empiricists going forward. We also, when feasible, highlight opportunities for future field, survey, and experimental research. A central takeaway from our review is that individual‐level factors significantly improve our ability to explain and predict accounting phenomena beyond firm‐, industry‐, and market‐level factors.

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“…[2019], Honigsberg [2019], Law and Mills [2019], Kowaleski et al. [2020], Christensen et al. [2020]).…”

Section: Introductionmentioning

confidence: 99%

From Implicit to Explicit: The Impact of Disclosure Requirements on Hidden Transaction Costs

Cuny

Even-Tov

Watts

2020

J of Accounting Research

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This paper provides evidence that disclosing corporate bond investors' transaction costs (markups) affects the size of the markups. Until recently, markups were embedded in the reported transaction price and not explicitly disclosed. Without explicit disclosure, investors can estimate their markups using executed transaction prices. However, estimating markups imposes information processing costs on investors, potentially creating information asymmetry between unsophisticated investors and bond‐market professionals. We explore changes in markups after bond‐market professionals were required to explicitly disclose the markup on certain retail trade confirmations. We find that markups decline for trades that are subject to the disclosure requirement relative to those that are not. The findings are pronounced when constraints on investors' information processing capacity limit their ability to be informed about their markups without explicit disclosure.

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Can ethics be taught? Evidence from securities exams and investment adviser misconduct

Cited by 36 publications

References 32 publications

Auditors are known by the companies they keep

Auditors are known by the companies they keep

Behavioral Economics of Accounting: A Review of Archival Research on Individual Decision Makers*

From Implicit to Explicit: The Impact of Disclosure Requirements on Hidden Transaction Costs

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