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Applied and bridge studies study record
Macro & systemic risk

What the Firm Maximizes, the Market May Regret

STATUS · Manuscript in progressSSRN · Not yet posted
Open teaching deckSSRN — not yet postedPublication record
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Reading βW
βW means annual system-welfare loss divided by annual industry revenue Π. Revenue is the denominator, never profit, earnings, or net income; ΔW and Π must use the same domain, same time period, and same activity boundary. See the βW methodology manual.
Contribution — what this adds to the conversation
Extends SAPM/MST canon to accounting domain with rigorous axiomatic derivation and empirical falsification conditions.
WHAT'S NEW · Formalizes Reporting-Fragility Intractability Theorem, introduces βW metric for reporting industry, and proposes DA as structural solution.

The paper establishes that when firms and their capital providers optimize reporting choices bilaterally, systemic welfare is structurally excluded, leading to a 'Hollow Win' equilibrium. The Reporting-Fragility Intractability Theorem shows disclosure-only reforms cannot fix this; mandated Decision Accounting with a system-welfare field is required. Empirical cases (Enron, Wirecard) demonstrate βW > 5, meaning each dollar of industry revenue causes over $40 in systemic damage during crises.