Cognitive Risk is a book about the least understood but most pervasive risk to mankind – human decision-making. Cognitive risks are subconscious and unconscious influence factors on human decision-making: heuristics and biases. To understand the scope of cognitive risk, we look at case studies, corporate and organizational failure, and the science that explains why we systemically make errors in judgment and repeat the same errors. The book takes a multidisciplinary and pedestrian stroll through behavioral science with a light touch, using stories to explain why we consistently make cognitive errors that not only increase risks but also simultaneously fail to recognize these errors in ourselves or our organizations. This science has deep roots in organizational behavior, psychology, human factors, cognitive science, and behavioral science all influenced by classic philosophers and enabled through advanced analytics and artificial intelligence. The point of the book is simple. Humans persist with bounded rationality, but as the speed of information, data, money, and life in general accelerates, we will need the right tools to not only keep pace but to survive and thrive. In light of all these factors that complicate risk, the book offers a foundational solution. A cognitive risk framework for enterprise risk management and cyber security. There are five pillars in a cognitive risk framework with five levels of maturity, yet there is no universally prescribed maturity level. It is more a journey of different paths. Each organization will pursue its own path, but the goal is the same – to minimize the errors that could have been avoided. We explain why risks are hard to discuss and why we systematically ignore the aggregation of these risks hidden in collective decision-making in an organization. The cognitive risk framework is a framework designed to explore the two most complex risks organizations face: uncertainty and decision-making under uncertainty. The first pillar is cognitive governance, which is a structured approach for institutionalizing rational decision-making across the enterprise. Each pillar is complimentary and builds on the next in a succession of continuous learning. There is no endpoint because the pillars evolve with technology. Enterprise risk is a team effort in risk intelligence grounded in a framework for good decision-making. We close with a call to become designers of risk solutions enabled by the right technology and nurtured by collaboration. We hope you enjoy the book with this context.

This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?

Given the increased social and environmental problems in China, this book looks into the social and environmental (environmental) disclosure practices of socially responsible Chinese listed firms by constructing a stakeholder-driven, three-dimensional, disclosure index. The book contains a three-part study: the first part explores the current status of social and environment disclosure practices. The second part empirically examines the relationship between corporate social and environmental disclosure and various influencing factors (i.e. stakeholders’ power and corporate characteristics). The third part empirically examines the link between corporate social responsibility (CSR) reporting (i.e. publishing a CSR report and the quality of the CSR report) and socially responsible reputation. The book finds that the CSR report provided more stakeholder-relevant social and environmental disclosure than the annual report. It also finds that corporate characteristics such as firm size, profitability and industry classification are all statistically significant factors influencing social and environmental disclosure of the Chinese firms studied. Shareholders significantly influenced firms’ social and environmental disclosure, and creditors significantly influenced firms’ disclosure related to their environmental performance. The final part of the study reports that publishing a CSR report and CSR reporting quality had a positive influence on firms’ socially responsible reputation and that the CEO/chairman duality negatively influenced firms’ socially responsible reputation. The book also highlights that financial performance and firm size were the two corporate characteristics that had a positive influence on corporate socially responsible reputation. This book will be of interest to those who are keen to learn more about corporate social responsibilities in the context of Chinese firms.