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Director expectations gap and hindsight bias

Author

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  • Mitchell Bryce
  • Muhammad Jahangir Ali
  • Paul R. Mather

Abstract

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.

Suggested Citation

  • Mitchell Bryce & Muhammad Jahangir Ali & Paul R. Mather, 2021. "Director expectations gap and hindsight bias," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 2965-2996, June.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:2:p:2965-2996
    DOI: 10.1111/acfi.12689
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    References listed on IDEAS

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