Most firms covary more positively with downmarkets than upmarkets—a phenomenon I refer to as “risk asymmetry.” I predict and find that risk asymmetry is caused, at least in part, by a firm's ability to selectively obfuscate poor performance. Risk asymmetry decreases significantly when firms are required to adhere to the more stringent auditing standards mandated under Section 404 of the Sarbanes-Oxley Act, however this decrease is more muted for firms with weak internal controls. Consistent with my predictions, these patterns are stronger for more market-sensitive firms and weaker for firms that include relative performance evaluation in their CEOs' pay packages. Taken together with prior literature (which documents that risk asymmetry is priced), my results suggest that a firm can lower its cost of capital by credibly reducing its ability to obfuscate value-relevant information.

中文翻译：

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报告灵活性对定价风险的不对称影响

大多数公司与低端市场的共变比高端市场更积极——我将这种现象称为“风险不对称”。我预测并发现风险不对称至少部分是由公司有选择地混淆不良业绩的能力造成的。当要求公司遵守《萨班斯-奥克斯利法案》第 404 条规定的更严格的审计标准时，风险不对称性会显着降低，但对于内部控制薄弱的公司而言，这种降低更为温和。与我的预测一致，这些模式对于市场敏感度更高的公司来说更强，而对于在 CEO 的薪酬方案中包含相对绩效评估的公司来说则更弱。结合先前的文献（这些文献对风险不对称进行了定价），