I examine how investors’ search for different types of information affects managers’ reporting decisions. I distinguish investors’ search for information about firm fundamentals (“fundamental search”) from their search for information about managers’ incentives (“incentive search”). Based on a parsimonious model of misreporting, I predict that fundamental search reduces the earnings response coefficient, which reduces managers’ benefits from misreporting, resulting in less misreporting. In contrast, incentive search increases the earnings response coefficient, which increases the benefits from misreporting, resulting in more misreporting. I test these predictions using an empirical technique that classifies EDGAR downloads as fundamental search or incentive search. Consistent with my theoretical predictions, I find that fundamental (incentive) search is negatively (positively) related to the earnings response coefficients and intentional restatements. I confirm my findings in two distinct empirical settings where the costs of information search exogenously changed: the adoption of XBRL and the electronic filing mandate of Form 4s. Collectively, the results show that investors’ information demand can shape managers’ reporting decisions, and its effects can vary depending on the type of information investors search for.

中文翻译：

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信息搜索和财务误报的经济学

我研究了投资者对不同类型信息的搜索如何影响管理者的报告决策。我将投资者对公司基本面信息的搜索（“基本面搜索”）与对管理者激励信息的搜索（“激励搜索”）区分开来。基于错误报告的简约模型，我预测基本面搜索会降低收益反应系数，从而减少管理者从错误报告中获得的收益，从而减少错误报告。相比之下，激励搜索增加了收益反应系数，从而增加了误报带来的好处，从而导致更多的误报。我使用经验技术来测试这些预测，该技术将 EDGAR 下载分类为基本搜索或激励搜索。与我的理论预测一致，我发现基本面（激励）搜索与收益反应系数和有意重述呈负（正）相关。我在两个不同的实证环境中证实了我的发现，在这两个环境中，信息搜索的成本发生了外生变化：XBRL 的采用和 Form 4 的电子提交要求。总的来说，结果表明投资者的信息需求可以影响管理者的报告决策，其影响可能因投资者搜索的信息类型而异。