Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Facebook Twitter LinkedIn Email Tools Icon Tools Get Permissions Search Site Cite View This Citation Add to Citation Manager Citation John Harry Evans; Introduction. The Accounting Review 1 July 2014; 89 (4): 1195. https://doi.org/10.2308/accr-10396 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentThe Accounting Review Search Advanced Search

It is well recognized that a critical step in the development of modern accounting research was the landmark study in 1968 by Ray Ball and Phil Brown (Ball and Brown 1968). Their study demonstrated the usefulness of accounting by documenting an association between financial statement information and stock prices, a market phenomenon. At about the same time, behavioral accounting researchers began to explore associated questions at the individual level, seeking to determine how accounting information affects individual decisions. Recent research in accounting and finance has drawn on results of behavioral experiments in an attempt to explain market anomalies, as first identified by Ball and Brown themselves (1968, 173).The two studies in this neuroscience forum provide a deeper understanding by again pushing the focus down to the more fundamental or “ultimate” source within an individual's brain. As Greg Waymire notes in his commentary, this approach has the potential to offer new insight into the relation between longstanding accounting principles and fundamental human behaviors reflected in social norms such as reciprocity and fair-dealing. In the process, this work offers accounting researchers new tools for understanding and explaining both individual and market behavior.

The design of CEO incentives is particularly important for firms in financial distress. We compare the resolution of CEO incentive problems in distressed firms between the 1980s versus the 1990s, focusing on how changes in contractual provisions, as well as in the executive labor market, resulted in a shift to a new equilibrium. Our analyses provide evidence that the increased bargaining power of creditors, together with changes in the use of contractual provisions in the 1990s, enabled creditors to more effectively retain highly skilled CEOs with firm-specific knowledge and provide them with incentives to improve firm performance. Data Availability: Data used in this study are available from public sources identified in the article.