We conduct two experiments with experienced accountants to investigate how fair value accounting affects managers' real economic decisions. In Experiment 1, we find that participants are more likely to make sub-optimal decisions (e.g., forgo economically sound hedging opportunities) when...

Regularly rotating agents between jobs in firms may lower the ratchet effect. Specifically, job rotation could disentangle the influence of current performance on agents' future incentives. In this paper, we conduct a controlled experiment to test the effectiveness of job rotation in eliminating...