Financial Literacy & Rules of Thumb Want to rule out Hawthorne effects as explanation for reported differences in management practices Construct index of financial reporting errors Bad period sales greater than average or good Average period better than good Average period profits better than good period sales 45% of subjects make at least one mistake; 11% make three or more Construct objective measures of reporting quality Drexler, Fischer, Schoar30 March 2011 16/20
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