Comparing alternative explanations for accounting risk-return relations

Research into accounting risk-return relations largely relied on reference- based models of managerial choice. This focus ignores other explanations th at may contribute to our understanding. Our study extends prior research by incorporating agency theory and implicit contracts theory into models base d on th behavioral theory of the firm. We test our hypotheses in a large sa mple of US manufacturing firms in two different economic environments. Our results show some support for each theory, suggesting that multiple framewo rks may better explain risk-return relations. Further, differences in resul ts between the two economic environments imply that macroeconomic condition s may be important. (C) 2000 Elsevier Science B.V. All rights reserved.