Thesis (Ph. D.)--University of Rochester. William E. Simon Graduate School of Business Administration, 2019.
I investigate the consequences of workforce distractions on financial reporting outcomes in
a setting where the cognitive resources accountants allocate to professional responsibilities
are constrained by personal interests. Specifically, I examine whether firms with a distracted
workforce are more likely to produce annual reports that are filed beyond the SEC’s mandated
deadline and/or subsequently restated. Using manually collected data, I measure distraction
as the proportion of the local workforce whose alma mater advances through the NCAA
basketball tournament. I find that firms confronted with workforce distraction are more
likely to file annual reports that are either late or subsequently restated, but not both. When
taken together, these results are consistent with cognitively constrained accountants facing a
tradeoff between the timeliness and reliability of annual reports. Additional analyses suggest
accountants weigh the salient signal of delayed disclosure against the comparatively small
risk of restatement when confronted with limited cognitive resources. Finally, tournament-driven
distraction is not associated with the financial reporting outcomes of firms whose
annual reporting period does not overlap with the NCAA basketball tournament.
