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The need to know

Researchers find that consumers are the ones to be blamed for the lack of voluntary disclosures by firms

Given that they spend so much time being responsible for other people’s money, would putting their own money in the fray make CEOs more accountable for their actions and innovative with their work? That is the question researchers M Reza Bradrania, P Joakim Westerholm and James Yeoh set out to answer with their thesis. They found that CEOs who trade actively in the market enforced a larger number of innovations at the workplace and were also more open to taking risks. The capex employed and research funding made by these CEOs in their companies was also much higher, with acquisitions being significantly higher in such cases. The higher the portfolio turnover, the riskier their ideas, with the researchers concluding that having skin in the game boosts CEO creativity.

Title: Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure

Source: The National Bureau of Economic Research

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