Asymmetric Information, Moral Hazard and Management Behavior: A Preliminary Look

Farhad F. Ghannadian, Victoria E. Johnson


Societal expectations of corporations have grown exponentially over the last several decades. Increasingly, the public expects corporations
to be successful in achieving both financial and social objectives. Investors and other stakeholders consider companies in terms of the “double
bottom line,” reflecting financial and social objectives. Thus, the corporate/society relationship depends on authenticity, integrity and
symmetry of knowledge. The recent scandals in the corporate environment and the subsequent downturn in the stock market have created
disillusionment with the investment arena. In other words, the volatility of the market could be a result of fluctuations in symmetric
information and a waning belief in corporate integrity. This study is a preliminary exploration of beliefs of managers regarding ethical/unethical
expectations in organizations, and the effect of asymmetry of information on managerial confidence.

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