Asset pricing models implicitly assume that firm characteristics are context-free. At the same time, companies provide a substantial narrative context that helps investors to put numeric information in perspective. Management may discuss non-quantitative factors that influence performance, such...

Generative AI tools such as ChatGPT can fundamentally change the way investors process information. We probe the economic usefulness of these tools in summarizing complex corporate disclosures using the stock market as a laboratory. The unconstrained summaries are dramatically shorter, often by...

We use equity portfolio allocation decisions to study the relevance of accounting information for investors’ demand for stocks. We document significant heterogeneity across investors in the demand relevance of profitability measures and income statement components. Although operating profit...

Does the context surrounding the numbers in financial statements help investors to interpret these numbers? Answering this question empirically presents a major challenge. We leverage recent advances in natural language processing to study the role of context in the interpretation of numeric...

Transparency of quality in the healthcare sector primarily aims to facilitate patients' care decisions, however, it also provides useful information to competing healthcare providers. We study how competitors respond to increased transparency about rivals' quality by exploiting a regulatory...

We take advantage of a new measure of political risk (Hassan et al. (2019)) to study the effects of firmlevel political risk on private debt markets. First, we use panel data tests and exploit the redrawing of US congressional districts to uncover plausibly exogenous variation in firm-level...

Do accruals-based earnings provide better information about future operating cash flows than do operating cash flows themselves, as predicted by the Financial Accounting Standards Board's conceptual framework (FASB 1978)? While this is a foundational issue in accounting, because it addresses the...

Do accruals-based accounting earnings provide better information to investors about future operating cash flows than operating cash flows themselves, as predicted by FASB's conceptual framework? The most recent evidence (Nallareddy et al., 2020) is that operating cash flows, measured correctly...

The new accounting standard requires that _nancial institutions provision for life-time expected losses on their loan portfolios. We develop a model for estimating long-term expected loan losses that incorporates a wide range of bank- and aggregate-level predictors of future losses. The model...