Showing 1 - 10 of 126
The audit market's unique combination of features - its role in capital market transparency, mandated demand, and concentrated supply - means it receives considerable attention from policymakers. We explore the effects of two market scenarios that have been the focus of policy discussions:...
Persistent link: https://www.econbiz.de/10013035353
We find that Sarbanes-Oxley (SOX) had two significant effects on the audit market for nonpublic entities. The first short-run effect stems from inelastic labor supply coupled with an audit demand shock from public companies. As a result, private companies reduced their use of attested financial...
Persistent link: https://www.econbiz.de/10011749427
I develop a structural model to quantify the costs of tax avoidance. In the model, the firm trades off tax savings with tax-audit risk, financial-reporting benefits, and non-tax costs (which affect pre-tax income). The comparative statics suggest tax avoidance is path-dependent, which can help...
Persistent link: https://www.econbiz.de/10012849519
We find that the public disclosure of regulators' supervisory actions changes their enforcement behavior. Using a novel sample of enforcement actions and orders (EDOs) and the setting of the 1989 Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which required public...
Persistent link: https://www.econbiz.de/10012850258
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...
Persistent link: https://www.econbiz.de/10012823531
We utilize branch-level data on deposits of commercial banks in India to study heterogeneity in depositors' responses to the disclosure of significant regulatory penalties. We find that men respond to such monetary penalties by withdrawing their deposits, whereas women do not. However, relative...
Persistent link: https://www.econbiz.de/10014351240
We estimate the firm-level rate at which working capital accruals convert into future cash flows. These conversion rates determine the expected cash value of a dollar of working capital accruals. For firms whose accrual innovations reverse within one year, we find that, on average, a one dollar...
Persistent link: https://www.econbiz.de/10012904718
We investigate the extent to which hedge fund managers smooth self‐reported returns. In contrast with prior research on the “anomalous” properties of hedge fund returns, we observe the mechanisms used to price the fund's investment positions and report the fund's performance to investors,...
Persistent link: https://www.econbiz.de/10013134240
This paper investigates the design of recognition thresholds in accounting standards. In statistics, a threshold classi.es evidence to balance two types of recognition errors weighted by their respective costs to a decision maker. In accounting recognition standards, a threshold induces firms to...
Persistent link: https://www.econbiz.de/10013010376
Using a principal-agent model in which shareholders care about financial as well as environmental and social (ESG) outcomes, we provide a theoretical framework for regulating and measuring ESG outcomes. We show that when ESG cannot be reliably measured, regulators can improve ESG outcomes by...
Persistent link: https://www.econbiz.de/10013307391