We examine the relation between earnings information content and the use of trust words, such as "character," "ethics," and "honest," in the MD&A section of 10-K. We find that earnings announcements of firms using trust words have lower information content than earnings announcements of firms...

The purpose of this study is to empirically examine the relations between audit outcomes and accounting standard design (principles-based vs. rules-based) for US firms. Considering that audit outcomes may vary with audit risk, which may differ under different accounting standards, we examine and...

Purpose: This study aims to examine whether chief executive officer (CEO) pay-performance sensitivity to shareholder wealth is related to the use of non-financial performance measures in incentive contracts. Design/methodology/approach: Using hand-collected performance measure data in a sample...

Auditors' low-balling in initial engagements is a longstanding concern for regulators and others. We examine the determinants and consequences of low-balling using more recent data. We provide evidence that auditors are likely to low-ball if they are “Big N” auditors, expect future revenues...