In this study, we investigate why earnings underperform relative to cash flows in explaining future cash flows. Using analytical and empirical analyses of the components of R2 values, we demonstrate an ‘opposing covariances effect’ in which covariances of opposite sign are summed and thus...

We examine the performance of new lease accounting rules in private debt markets. Among debt contracts issued before ASC 842 became effective but that end after the effective date, we find 87 percent exclude or provide an option for contracting parties to exclude the effects of ASC 842. We find...

We examine whether managers convey more information via voluntary disclosure channels when standard-setters limit managers' discretion in GAAP. We estimate the extent to which standard setters limit managers' discretion by counting the number of times obligatory modal verbs are mentioned in the...

We study how customer concentration of targets impacts the occurrence, structure and performance of M&A deals. We hypothesize that acquirers respond to customer concentration-related risk by (1) placing fewer bids for targets with greater customer concentration and (2) by using more stock...

We examine whether managers provide more voluntary disclosure when GAAP limits their reporting discretion in financial statements. We find managers are more likely to disclose non-GAAP earnings, issue more management forecasts, and provide longer yet more readable management discussion and...

We examine whether restricting managers’ discretion through GAAP impacts the usefulness of accounting information in debt contracting. Our study informs standard setters and regulators regarding the debt-contracting implications of limiting managers’ discretion via accounting standards. We...