This study examines whether the use of cash-flow-based performance metrics (CFM) in setting CEO compensation affects the design of loan contracts. Cash-flow-based performance evaluation can motivate managers to improve cash flows, which potentially enhances the firms’ debt repayment ability...

We investigate whether short interest affects supply chain partners’ investments. This investigation is important for understanding the real effect of short sellers in facilitating stakeholders’ investment decisions. Prior research suggests that short interest conveys negative news in a...

We study how uniformed traders (defined as strategic traders not endowed with private information) use public disclosure and prices to form beliefs and trade. We manipulate the availability of public forecasts (e.g. earnings forecasts) of forthcoming public signals (e.g., earnings...

We examine the effect of employment contract horizon on managers' discretion in financial reporting. During the contract horizon, the board learns about a new CEO's ability from realized firm performance and uses this information to determine whether to renew or terminate the CEO's contract....

When information asymmetry is a major market friction, earnings forecasts can lead to higher price efficiency even after the information in forecasts completely dissipates upon earnings realizations. We show this in an experimental market that features information asymmetry (i.e., some traders...