In this paper we investigate the reputational penalties to managers of firms announcing earnings restatements. More specifically, we examine management turnover and the subsequent re-hiring of displaced managers at firms announcing earnings restatements during 1997 or 1998. In contrast to prior...

Although the Sarbanes-Oxley Act of 2002 imposes internal control disclosure and certification requirements on management, regulators are concerned that companies are not disclosing material internal control weaknesses on a timely basis. This study investigates whether litigation risk could act...

We examine whether auditors effectively incorporate cues indicating increased risk into their evaluation of fair value estimates. Consistent with concerns from PCAOB inspections, more than one-third of fair value estimates in our security-level dataset differ from the true fair value by an...

This study investigates factors associated with restatement-related litigation against U.S. audit committee members. Using a sample of restatement-related litigation in the U.S. over the period 1999-2012, we find that the likelihood of audit committee litigation is higher in the post-SOX time...

Proponents of compensation plans based on economic profits argue that these plans control for deficiencies in stock-based or earnings-based bonus plans and thereby better align managers? and shareholders? interests. We examine whether compensation plans based on economic profits do in fact...

A primary argument against fair values is the lack of verifiability, where verifiability is defined as consensus in measurement by independent parties. Changes in data transparency, pricing sources, and oversight mechanisms potentially affect consensus in the reporting of investment fair values...

In this paper we address two important questions that emerged in the aftermath of the recent banking crisis. First, did the financial statements of the bank holding companies provide an early warning of their impending distress? Second, whether the actions of four key financial intermediaries...

The short interest data reported in the United States aggregate valuation shorts (motivated by a pessimistic opinion on firm value) and arbitrage shorts (motivated by various arbitrage or hedging strategies). However, the information content of these two sources of short interest is different...

We study the behavior of short sellers around earnings restatements. We find that short sellers accumulate positions in restating firms several months in advance of the restatement and subsequently unwind these positions after the drop in share price induced by the restatement. The increase in...

This is a pre-analysis plan for The Reg SHO Reanalysis Project, in which we will reassess primary results from selected recent accounting and finance papers, which exploit the randomized trial conducted by the Securities and Exchange Commission (SEC) from May 2, 2005 to July 6, 2007. As part of...