I am the Nicholas H. Noyes Professor of Management and Professor of Accounting at Cornell University’s Johnson Graduate School of Management.
For my research, I create laboratory financial markets and games, and analyze how changes in market structure and regulation affect individual behavior and aggregate market outcomes. Many of my studies show that psychological and environmental forces can be far more powerful than assumed by traditional theories of economics and finance. These theories have guided my advice to the Financial Accounting Standards Board, where I served as Director of the Financial Accounting Standards Research Initiative from 2007-2012. My current research focuses on the causes, consequences and ethics of “measure management”: managing the measures of performance, rather than managing the true performance those measures are intended to capture.
I teach Managerial Reporting to Executive MBA students at the Johnson School, and through a certificate program at eCornell. I also serve as Johnson’s Faculty Director of eLearning, which is exploring opportunities for redesigning our School’s curriculum to take advantage of advances in educational technology. I am currently working on my first book, How to be a Good Professor, to be published this Fall by Cornell University Press.
My Approach to Ethical Systems:
Albert Einstein is said to have posted a sign in his office, reading: “Not everything that counts can be counted, and not everything that can be counted counts.”
Most ethical issues in accounting arise because people have the incentive and opportunity to improve what gets counted, rather than what actually counts (a practice called measure management). Many professors of business ethics focus on the challenges facing those who are evaluated. For example, is it wrong to devote more effort to sales and less to service if you are rewarded only for the former? In contrast, I teach my students how to design reporting systems that reduce the temptations of measure management, or when that is not possible, at least reduce its costs to the organization. Solutions typically require designers to understand organizational strategy and individual psychology, together with the details of reporting system mechanics.
My Ethical Systems Research Page: Accounting
My Major Relevant Publications
"Pragmatics, Implicature and the Efficiency of Elevated Disclosure," article in Johnson School Research Paper Series, No. 48-2011 (2011).
"Norms, Conformity and Controls," article in Journal of Accounting Research, June 2011, 49(3), 753-790 - with William Tayler.
"Behavioral vs. Traditional Finance," Chapter 2 in Behavioral Finance, Kent Baker and John Nofsinger, Eds. Wiley (2010).
"Contagion of Wishful Thinking in Markets," article in Management Science. May 2009, Vol. 55(5), 738-751 - with Nicholas Seybert.
"The 'Incomplete Revelation Hypothesis' and Financial Reporting," article in Accounting Horizons, September 2002, 16(3), 233-244.
"Confidence and the Welfare of Less-Informed Investors," article in Accounting, Organizations and Society, November 1999, 24, 623-647 - with Robert Libby and Mark Nelson.