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Director expectations gap and hindsight bias
Author(s) -
Bryce Mitchell,
Ali Muhammad Jahangir,
Mather Paul R.
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12689
Subject(s) - hindsight bias , psychology , accounting , key (lock) , outcome (game theory) , business , social psychology , economics , computer science , microeconomics , computer security
We evaluate the opinions of directors and other stakeholders and show that independent directors (IDs) are facing an expectations gap about their role. The results of an experiment also indicate that business journalists and investors provided lower evaluative judgements of decisions made by IDs than did directors and that evaluative judgements of financial decisions made by IDs were affected by outcome information (hindsight bias). It is important that regulators and the media, as a key information intermediary, remain cognisant of the effects of hindsight bias on their judgements about ID performance, especially after events such as corporate collapses.