The effect of alternative accounting measurement bases on investors' assessments of managers' stewardship

Spencer B. Anderson, Jason L. Brown, Leslie Hodder, Patrick E. Hopkins

Research output: Contribution to journalArticlepeer-review


We conduct a laboratory experiment to examine investors' assessments of managers' stewardship. We provide evidence that investors tend to attribute external (i.e., non-manager-related) causes of firm performance to managers' performance. We predict and find that fair value information enables investors to overcome this tendency and make better stewardship decisions than investors with amortized cost information. We also find that investors presented with amortized-cost-based financial statements perform better to the extent they access fair-value-based footnote information, while investors presented with fair-value-based financial statements perform worse to the extent they access amortized-cost-based footnote information. Collectively, our results suggest that investors' stewardship decisions are improved because fair value information more transparently provides the information required to properly consider the opportunity costs associated with managers' actions and disentangle endogenous actions by managers from exogenous market forces that are outside of managers' control.

Original languageEnglish (US)
Pages (from-to)100-114
Number of pages15
JournalAccounting, Organizations and Society
StatePublished - Oct 1 2015


  • Attribution theory
  • Comparability
  • Experimental market
  • Fair value
  • Stewardship
  • Transparency

ASJC Scopus subject areas

  • Accounting
  • Sociology and Political Science
  • Organizational Behavior and Human Resource Management
  • Information Systems and Management


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