The ODA Section invites you to a seminar where Nikolaj Niebuhr Lambertsen will give the following presentation:

Disclosing your propensity to lie: An unraveling argument

Abstract
I study voluntary disclosure of firm's information manipulation propensity. In a costly signaling equilibrium where all firms have the same manipulation propensity, all firms lie but no one is cheated. If the propensity for manipulation varies between firms and is unknown, the market cannot discern which firm manipulates more and groups everyone together. This means that a firm with low manipulation propensity has incentives to disclose this to separate from firms with high manipulation propensity. In equilibrium, all firms reveal their manipulation propensity, and no one is cheated, yet everyone manipulates. The model is then applied to study the desire for certified disclosure of internal control strength and the optimal fee charged by the certifier. The model provides a rationale for disclosures of manipulation propensity that can arguably be disclosed and verified, such as management remuneration and auditor fees.

Everyone is welcome!