We analyze a model of voluntary disclosure where investors impose a discount for uncertainty about firm value. We find a commitment to conservative reporting, defined as a requirement that firms disclose bad realizations of economic events, results in firm prices being higher on average....

We predict and find that firms use annual grants of options and restricted stock to CEOs to manage the optimal level of equity incentives. We model optimal equity incentive levels for CEOs, and use the residuals from this model to measure deviations between CEOs' holdings of equity incentives...

Considerable research has documented the role of debt covenants and conservative financial accounting in addressing agency conflicts between lenders and borrowers. Beatty, Weber and Yu (BWY, 2008) document interesting, but mixed, findings on the relation between debt covenants and conservative...

We compute and compare risk-adjusted pay for US and UK CEOs, where the adjustment is based on estimated risk premiums stemming from the equity incentives borne by CEOs. Controlling for firm and industry characteristics, we find that US CEOs have higher pay, but also bear much higher stock and...

We examine whether managers' trading decisions (both at a firm and personal level) are correlated with trading strategies suggested by the operating accruals and the post-earnings announcement drift (SUE) anomalies. We discuss advantages and disadvantages of the use of managerial trading...

Previous research offers little large-sample evidence on the magnitude of non-financial firms' risk exposure hedged by financial derivatives. Among 234 large non-financial derivatives users, if the median firm simultaneously experiences a three standard deviation change in interest rates,...

If a firm's derivative positions generate positive cash flows or value in periods of economic adversity, then those derivatives are deemed to hedge the firm's risk. Previous research offers little large-sample evidence on the magnitude of non-financial firms' risk exposure hedged by the...

The costs associated with compiling data on employee stock option portfolios is a substantial obstacle in investigating the impact of stock options on managerial incentives, accounting choice, financing decisions, and the valuation of equity. We present an accurate method of estimating option...