Chandra Kanodia

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This paper examines how various revenue recognition rules affect the incentive properties of accounting information in a stewardship setting. Our analysis demonstrates that if revenues are recognized according to the realization principle, a single performance measure based on aggregated accounting information can be used to provide desirable production and(More)
We test the hypotheses that (i) poor accounting quality is associated with delayed stock price adjustment to information, and (ii) investors require higher future stock returns for the price delay associated with poor accounting quality. We define accounting quality as the precision with which financial reporting informs equity investors about future cash(More)
A threshold partitions evidence to a binary classification. This paper studies the design of an optimal threshold and explains one benefit of a binary classification (over the disclosure of evidence). In a model with managers’ opportunistic influence on evidence, a threshold affects not only the ex post use of information by stakeholders but also the ex(More)
We examine uniform and discretionary regimes for reporting information about firm performance from the perspective of a standard setter, in a setting where the precision of reported information is diffi cult to verify and the reported information can help coordinate decisions by users of the information. The standard setter’s task is to choose a reporting(More)
We investigate the ability of forecast patterns to convey information about an analyst's predictive ability. We establish an equilibrium strategy where the analyst issues a forecast only if the realization of his private signal exceeds a threshold. In equilibrium, higher-ability analysts choose higher thresholds than lower-ability analysts, and investors(More)
In this paper, we describe a bankruptcy game played in a pure-exchange, perfectly competitive economy, and establish the existence of competitive equilibria. The game admits of lying by borrowers and costly auditing by lenders. The equilibria are characterized by (endogenously determined) equilibrium probabilities of default, loan quantities, interest(More)
This paper proposes a theory why both the traditional and the recently emerged shadow banking systems become opaque when they co-exist. The theory endogenizes the disclosure decisions of the two banks when they both face liquidity risk stemming from runs by investors and, at the same time, compete against each other in attracting investment from the same(More)