Time:
June 23-25, 2014
The course will be followed by the Workshop in Accounting and Economics, Odense, June 26-27, 2014
Venue:
Department of Business and Economics, University of Southern Denmark, Odense
Instructor:
Brian Mittendorf, The Ohio State University
Aim:
The aim of the course is to teach the students the economics of competition and disclosure of information with special reference to applications in accounting. Accounting is an important and unique source of information, as it is partly regulated and at the same time it is allowed to supply information from firms to the market in a voluntary disclosure. The object of the information is to support the competition in the market place. The aim of the course is to get the students to understand the contributions of the classical and new papers addressing this set of problems.
Mode of instruction:
The mornings of the course will be devoted to lectures in which there will be presentation of the topics and examples which demonstrate the subtle points of the topic.
The afternoons will be a research seminar where the students will be given the task of replicating the major points made in the morning's lecture by working through some examples and of making models like the ones presented in the lecture with minor changes in order to analyze the consequences of such changes.
Learning objectives:
The students should learn to understand and appreciate the accounting literature on competition and disclosure based on economics models.
The students should be able to construct and analyze simple models of competition and/or disclosure in an accounting setting.
The students should be able to apply the insights of this type of research in their own research.
Prerequisites:
Ph.D. students in good standing in accounting or economics who have had some exposure to economics modeling.
DAY 1: (Ex Ante) Disclosure Policy and Competition
The goal here is to examine the costs and benefits of informing competitors.
Readings:
Darrough, M. 1993. Disclosure policy and competition: Cournot vs. Bertrand. Accounting Rev., 68: 534-561.
Raith, M. 1996. A general model of information sharing in oligopoly. J. Econom. Theory, 71: 260-288.
DAY 2: (Ex Post) Discretionary Disclosure and Competition
The goal here is to apply (and extend) the key results in the discretionary disclosure literature to the case of competition.
Readings:
Milgrom, P. 1981. Good news and bad news: Representation theorems and applications. Bell J. Econom., 12: 380–391.
Verrecchia, R. 1983. Discretionary disclosure. J. Accounting Econom., 5: 365-380.
Dye, R. 1985. Disclosure of nonproprietary information. J. Accounting Res., 23: 123-145.
Arya, A., Frimor, H., and Mittendorf, B. 2010. Discretionary Disclosure of Proprietary Information in a Multisegment Firm. Management Science, 56: 645-658.
DAY 3: Earnings Management and Competition
The goal here is to apply (and extend) the key results on (possibly) costly misreporting to the case of competition.
Readings:
Stein, J.C. 1989. Efficient Capital Markets, Inefficient Firms: a model of myopic corporate behavior. The Quarterly Journal of Economics, 104(4): 655-669.
Crawford, V. and Sobel, J. 1982. Strategic Information Transmission. Econometrica, 50(6): 1431-1451.
Responsible:
Professor John Christensen
Applications and inquiries should be sent to John Christensen, jcn@sam.sdu.dk. The application must contain research plan and curriculum vitae. Deadline: April 1, 2014.