Accounting for change

Assistant Professor Ewa Sletten finds passion for accounting amid privatization in Poland

Professor Ewa Sletten

Growing up in centrally planned Poland, Assistant Professor Ewa Sletten's exposure to accounting — “the language of business” — was limited.

But things would soon change. In 1995, when Sletten went to college at the University of Lodz, “Poland was intensely transforming,” she says. “In the centrally planned economy there was no need for financial accounting — all enterprises were government owned.”

As Poland transformed, “businesses were privatized, the stock market was established, and companies started going public and the demand for financial information became pressing,” Sletten says. Many of her professors helped to bring those changes to accounting standards.

“This allowed me to understand that accounting standards are set in response to the needs of users of financial information and made me wonder what policies serve these needs best,” she says. In other words, it started a lifelong passion for accounting for Sletten, who came to MIT this year from Kellogg, where she earned her PhD in accounting and worked as an instructor.

Full disclosure

Sletten's research focuses on discretionary disclosure, quality of financial reporting, corporate governance, and executive compensation. To her, accounting is a crucial piece of the economic puzzle, and nowhere is that more apparent than at MIT Sloan. Says Sletten, “I am looking forward to working with the amazing research group at MIT.”

Sletten arrived on campus mid-summer and had already started making contacts and sharing ideas with her new colleagues. “MIT has a very collegial feeling,” she says.

Sletten's interests lie in corporate disclosure decisions, consequences of earnings manipulations, and executive compensation. Much of her recent work analyzes the effect of stock price changes, insider-selling incentives, and litigation risk on discretionary disclosure. She has also studied the link between earnings manipulations and executive turnover.

Her most recent paper on stock price provides evidence that exogenous declines in stock prices can motivate managers to disclose price-relevant information that they previously withheld from investors. “Simply put, the manager publicly announces information when it ‘becomes' good news,” explains Sletten. The work is important because undisclosed information likely means inflated stock prices.

Immediate rewards, long-term results

Sletten says teaching — a profession that often yields “immediate rewards” — provides a nice counterbalance to her research, during which one must “wait a while for the returns.”

Sletten is currently teaching Business Analysis and Valuation Using Financial Statements, something she is enjoying. “With teaching, the learning process goes both ways.”

Thus far, Sletten and her husband are enjoying settling into their new city. As a European transplant, she is “used to cities with history,” she says. As an avid lover of the outdoors, Boston is a good fit. “It is always a draw to be part of a culture like this — both in Boston and at MIT Sloan.”