We provide a bridge between the voluntary disclosure and the earnings management literature. Voluntary disclosure models focus on managers' discretion in deciding whether or not to provide truthful voluntary disclosure to the capital market. Earnings management models, on the other hand,...

This paper develops a model of the causes and consequences of misreporting of corporate performance. Misreporting in our model covers all actions, whether legal or illegal, that enable managers of firms with low value to make statements that mimic those made by firms with high value. We show...

Restatements create significant problems and uncertainties for the general investors. The goal of this paper is to provide a deeper understanding of how investors use financial statements information to help in their capital allocation decisions. In particular, our study contributes to the body...

Recent research suggests that geographic distance is associated with information asymmetry and performance, but it is not clear why this is so. In this study, we examine the effects of geographic distance on monitoring quality in the context of the U.S. audit market. Auditors operate under...

The introduction of IFRS in Europe was intended to improve accounting quality and facilitate cross-border financial transactions. This study examines whether IFRS increases value-relevance of corporate disclosure using traders' response in financial markets of 15 EU countries. If the regulatory...

This paper provides a rational explanation for earnings discontinuity in the context of the agency model. A company manager often possesses private information about the project's expected return. This information is valuable to the firm because early warning that a project is unlikely to...

Compared to non-family firms, family firms face less severe agency problems due to the separation of ownership and management, but more severe agency problems that arise between controlling and non-controlling shareholders. These characteristics of family firms affect their corporate disclosure...

This paper examines whether firm managers engage in the expectation management of their current performances through their own forecasts and consecutive adjustments. Expectation management in order to achieve positive surprises by lowering analyst forecast levels has been documented (Bernhardt...

This paper develops a new theory of CEO compensation based on the opacity of the internal workings of corporations to outsiders and the CEO's ability to divert or tunnel corporate resources to self-enriching uses. In this setting, neither high powered option compensation nor fixed salary...

I examine whether earnings that are smoother or more volatile than cash flows provide or garble information. Consistent with theories that predict more informed trading when public information is less informative, I find that bid-ask spreads and the probability of informed trading are higher...