My name is Sebastian and I am an Assistant Professor in Accounting from the University of Amsterdam, Amsterdam Business School. You can find more information about me and my work on this site.
My research examines how the formatting and complexity of firm disclosure influences users, preparers and auditors of financial statements in their judgment and decision making. While my research projects involve several agents, they all relate to fundamental topics in financial accounting, such as disclosure credibility, investor learning, earnings management and fraud. Using mostly economics based experimental methods, I capitalize on the comparative advantage of experiments at disentangling the effect of disclosure on investment decisions, measuring intervening processes and drawing strong causal inferences.
Assistant Professor in Accounting
University of Amsterdam
Amsterdam Business School
Plantage Moudergracht 12
1001 NL Amsterdam
PhD in Accounting
ROTTERDAM SCHOOL OF MANAGEMENT,
PhD in Accounting and Control
Topic: Experiments on Financial Disclosure
Supervisors: Prof. Erik Peek and Prof. Marcel van Rinsum
UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN
Research visit from August to December 2018
Invited by Jessen Hobson
HUMBOLDT UNIVERSITY, BERLIN
Master in Economics and Management Studies
Master thesis: "Behavioral Approaches to Information Acquisition and Avoidance"
INVESTOR JUDGMENT AND
EXPERIMENTAL ACCOUNTING RESEARCH
MANAGING EARNINGS TO APPEAR TRUTHFUL: THE EFFECT OF PUBLIC SCRUTINY ON EXACTLY MEETING A THRESHOLD
with Jessen Hobson
The past two decades have not eliminated managers’ willingness to manage earnings to meet and beat earnings thresholds, but have increased investors’ skepticism of earnings that exactly meet those thresholds, providing perverse incentives to not meet earnings expectations exactly. Using a low-external-context experiment, we find that managers avoid exactly meeting a benchmark, even when they must alter true earnings and incur a monetary cost to do so. We manipulate the effect of intensified scrutiny of managers and find that when earnings exactly meet a benchmark, managers are more likely to misreport earnings when they report under high public scrutiny. This is particularly the case for managers who are sensitive to others’ perceptions (and thus low on the Dark Triad scale). Further, we show that this misreporting increases managers’ belief that the market will accept their reports, consistent with managers misreporting for self-presentational goals. Thus, we examine a new incentive to manage earnings: misreporting to appear truthful. These results help explain otherwise undetectable behavior around earnings benchmarks and are important as managers are increasingly scrutinized by critical media, activists, and political oversight bodies, and as they face skepticism via more intimate forms of disclosure and communication, such as social media.
IMPROVING AUDIT QUALITY BY ENHANCING AUDITORS' DETECTION OF MARKERS OF MANAGEMENT DECEPTION
with Jessen Hobson, Mark Peecher and Devin Williams
The investing public has long looked to the independent financial-statement auditor to help prevent and detect instances of material financial-statement fraud. Yet, it has only been in recent decades that audit standards recognize explicitly that auditors are responsible for providing high assurance that the financial statements are not materially misstated due to fraud. In this paper, we investigate whether auditors’ ability to detect fraud is impaired by a psychological preference to avoid believing that one’s own client – a socially close affiliate – has been engaging in deception of the investing public as well as the auditor themselves. To test our research question, we asked 184 Dutch Big-4 auditors from senior to partner level to listen to an earnings conference call of their own client and respond to a survey. We manipulated in a fully-crossed between-subjects design whether participants were primed to look out for signs of fraud or cognitive dissonance while listening to the call and taking notes. This project is currently in the data analysis phase as we are combining our experimental data with archival insights from the participating firms and publicly available financial data.
NOT SEEING EYE TO EYE: DIFFERENCES IN SHAREHOLDERS' AND PROSPECTIVE INVESTORS' REACTION TO ADVERSE EVENT DISCLOSURE
with Erik Peek and Marcel van Rinsum
This study investigates the effect of adverse event disclosure on shareholders’ versus prospective investors’ judgments of management credibility, contingent on the locus of attribution employed by management in their communication about the event. Relying on Social Identity theory and prior empirical findings, we presume that shareholders identify with the company they are invested in. We find that identified shareholders and non-identified prospective investors indeed make different judgments about managerial credibility when managers employ external attribution. Prospective investors view such attributions as deceptive, and hence judge the explanation given by management to be much less believable than shareholders do. Thus, we find that company identification has a strong positive effect on credibility given external attribution, while we find no significantly different effect under internal attribution. We also provide evidence that this difference in credibility leads to different valuation judgments. Thus, we show that adverse event disclosure can induce disagreement among market participants. We discuss important practical implications of our findings. One such implication is that, arguably counterintuitively, managers should shy away from employing external attributions, but rather admit to their own inadequacies in terms of their (in)actions, especially when aiming their communications about adverse events at prospective investors.