About

Ronald A. Dye is the Leonard Spacek Professor of Accounting Information and Management at the Kellogg School of Management, Northwestern University, a position he has held since 1993. He has been a faculty member at Kellogg since 1986 and previously held appointments in accounting and economics at the University of Chicago and in accounting at Yale University. His research interests include managerial accounting, management compensation, financial disclosure, information economics, and the economics of standards. Professor Dye has authored more than 40 papers published in leading academic journals of accounting and economics, and he serves on the editorial boards of several prominent journals in the field. His teaching focuses on managerial accounting, management compensation, financial disclosure, information economics, and the economics of standards, and he regularly gives seminars at international business schools. His academic background includes a PhD in Economics from Carnegie Mellon University, an MS in Economics from the same institution, and a BS in Mathematics from the State University of New York, Cortland.

Research topics

• Business
• Economics
• Accounting
• Computer Security
• Finance
• Computer Science
• Political Science
• Psychology
• Financial system
• Law
• Actuarial science
• Monetary economics
• Microeconomics

Selected publications

• Management forecasts: Biases, incentives, and spillover effects

  The RAND Journal of Economics · 2024

  1st authorCorresponding
  • Business
  • Economics
  • Accounting

  Abstract Management earnings forecasts (MEF), a form of voluntary disclosure, are different from most other disclosures because MEF have spillover effects on managers' subsequent operating decisions and earnings reports. These effects arise from managers' attempts to reduce their forecast errors. Even though managers can separate their firms from less profitable firms by issuing forecasts the latter cannot match, there is no equilibrium where all managers issue forecasts. We show that managers who issue (resp., don't issue) MEF choose above (resp., below) first‐best operating actions. We identify which managers issue MEF and why allowing managers to misreport earnings may increase expected earnings.

  PublisherOA PDFDOI

• On the Disclosure of Half-Truths and the Duty to Update

  Management Science · 2022 · 3 citations

  Senior authorCorresponding
  • Computer Science
  • Political Science
  • Accounting

  We develop a model of a manager’s equilibrium voluntary disclosure policy to study how that policy changes depending on whether the manager is prohibited from disclosing, or allowed to disclose, a half-truth; we also examine how the disclosure policy changes depending on whether the manager has a duty to update past disclosures. Among our results, we show that if a manager is prohibited from issuing half-truths, the manager discloses a wider array of information than if the manager is allowed to issue half-truths, and investors view the absence of disclosure more skeptically; we also show that imposing a duty to update on the manager does not affect the manager’s initial disclosures, but it results in the manager disclosing uniformly more information over time. This paper was accepted by Brian Bushee, accounting.

  PublisherDOI

• Debt and Voluntary Disclosure

  The Accounting Review · 2020 · 17 citations

  Senior authorCorresponding
  • Business
  • Monetary economics
  • Finance

  ABSTRACT This paper studies equilibrium voluntary disclosures for a company financed with both debt and equity, where the firm's manager is compensated based on a linear combination of the market prices of the firm's equity and enterprise values (i.e., the sum of its values of equity and debt). Such compensation policies span “all equity” contracts, “all debt” contracts, and “all enterprise value” contracts. We show: (1) under both “all equity” and “all debt” contracts, increased debt always leads to reduced voluntary disclosure; (2) under “all enterprise value” contracts, increased debt has no effect on voluntary disclosure; (3) for all contracts that place positive weight on both equity and enterprise values, more debt leads to less (respectively, more) disclosure if the initial debt level is low (respectively, high); (4) increasing the weight on equity prices always induces less disclosure, so: (5) “all equity” contracts minimize disclosures, and “all debt” contracts maximize disclosures.

  PublisherDOI

• Some Recent Advances in the Theory of Financial Reporting and Disclosures

  Accounting Horizons · 2017-02-01 · 16 citations

  article1st authorCorresponding

  SYNOPSIS This is a personal essay that contains my views on some of the recent history and evolution of the theory of financial accounting and disclosures. The essay starts by discussing how research on information economics by Hirshleifer and Akerlof combined with Demski's critique of academic assessments of accounting standards shifted theoretical research toward emphasizing the role of voluntary disclosures. Grossman's and Milgrom's “unravelling result” is reviewed, as are recent modeling efforts that provide a foundation for studying firms' incomplete voluntary disclosures. The paper also speaks to some contemporary financial reporting problems, such as fair value accounting, and also to an assessment of some recent financial innovations, such as so-called flash trading.

  PublisherDOI

• Equilibrium voluntary disclosures, asset pricing, and information transfers

  Journal of Accounting and Economics · 2017-12-30 · 60 citations

  article1st authorCorresponding
  PublisherDOI

• Optimal disclosure decisions when there are penalties for nondisclosure

  The RAND Journal of Economics · 2017-08-01 · 55 citations

  article1st authorCorresponding

  We study a seller of an asset who is liable for damages if the seller fails to disclose to buyers an estimate of the asset's value he knew prior to the sale. Our results include as either the “damages multiplier” that determines the size of the damages the seller must pay buyers increases, or as the probability the seller is caught withholding his estimate from buyers increases, the seller discloses his estimate less often, and as the precision of the seller's estimate increases, he sells a larger fraction of the asset.

  PublisherDOI

• Hedging Executive Compensation Risk through Investment Banks

  The Accounting Review · 2015-09-01 · 16 citations

  article1st authorCorresponding

  ABSTRACT Allowing CEOs to hedge the risk in the compensation contracts their firms give them has been controversial because such hedging allows the executives to undo some of the incentive effects of those contracts; it also results in a divergence between the compensation firms pay their senior executives and the compensation those executives effectively receive. We analyze these personal hedging activities of CEOs and identify when firms may gain or lose by allowing or prohibiting such hedging. We also describe variations in CEOs' demands for various compensation hedges, and how firms will restructure their CEOs' compensation contracts in anticipation that the CEOs will engage in such hedging.

  PublisherDOI

• Financial Engineering and the Arms Race Between Accounting Standard Setters and Preparers

  Accounting Horizons · 2014-12-01 · 52 citations

  article1st authorCorresponding

  SYNOPSIS This essay analyzes some problems that accounting standard setters confront in erecting barriers to managers bent on boosting their firms' financial reports through financial engineering (FE) activities. It also poses some unsolved research questions regarding interactions between preparers and standard setters. It starts by discussing the history of lease accounting to illustrate the institutional disadvantage of standard setters relative to preparers in their speeds of response. Then, the essay presents a general theorem that shows that, independent of how accounting standards are written, it is impossible to eliminate all FE efforts of preparers. It also discusses the desirability of choosing accounting standards on the basis of the FE efforts the standards induce preparers to engage in. Then, the essay turns to accounting boards' concepts statements; it points out that no concept statement recognizes the general lack of goal congruence between preparers and standard setters in their desires to produce informative financial statements. We also point out the relative lack of concern in recent concept statements for the representational faithfulness of the financial reporting of transactions. The essay asserts that these oversights may be responsible, in part, for standard setters promulgating recent standards that result in difficult-to-audit financial reports. The essay also discusses factors other than accounting standards that contribute to FE, including the high-powered incentives of managers, the limited disclosures and/or information sources outside the face of firms' financial statements about a firm's FE efforts, firms' principal sources of financing, the increasing complexity of transactions, the difficulties in auditing certain transactions, and the roles of the courts and culture. The essay ends by proposing some other recommendations on how standards can be written to reduce FE. JEL Classifications: M31.

  PublisherDOI

• Financial Engineering and the Arms Race between Accounting Standard Setters and Preparers

  SSRN Electronic Journal · 2014-01-01 · 9 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Agency conflicts in the presence of random private benefits from project implementation

  Economics Letters · 2014-03-16

  article1st authorCorresponding
  PublisherDOI

Frequent coauthors

• Sri S. Sridhar

  Kellogg's (Canada)

  8 shared

• Anne Beyer

  6 shared

• Shyam Sunder

  5 shared

• Joel S. Demski

  3 shared

• John H. Miller

  Victoria University of Wellington

  2 shared

• Peter D. Eimas

  2 shared

• Sandeep Vaishnavi

  2 shared

• Jeremy Bertomeu

  Washington University in St. Louis

  2 shared

Awards & honors

• Yuji Ijiri Distinguished Visiting Lecturer at Carnegie Mello…
• Named John Diclhaut Scholar at the University of Minnesota
• Best paper in Accounting Horizons in 2015, American Accounti…
• Distinguished Visiting Scholar, UCLA Anderson School of Mana…
• Distinguished Visiting Scholar, Stanford University, Novembe…