Search

Article Information


Facade and Self-Deception in the Deteriorating Financial Firm
Balderston, Frederick E.
29/2  (Winter 1987): 101-111

Financial executives and financial regulators sometimes agree to ignore facts whose overt recognition would precipitate a crisis. They use accounting facades to do this. The financial firm may also be jeopardized by executive self-deception. Two forms of this are optimistic biases and failure to canvas market alternatives adequately. The top executive officer may also exhibit a pattern of ever-accelerating risk-taking, resulting in "turbo-deterioration" of the firm, or the firm may be so organized as to induce imprudent risk-taking at subordinate levels. Facades and self-deceptions pose important, unresolved issues of public policy and financial regulation.

 

California Management Review

Berkeley-Haas's Premier Management Journal

Published at the University of California for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

Learn more
Follow Us