In the presence of business groups, the expropriation through related party transactions (RPTs) is common and costly to minority shareholders. At the same time, it is well recognized that RPTs can help firms overcome market shortcomings. Using the setting of India's RPT voting rule, I find that...

We study the decisions by targets in private equity and MBO transactions whether to actively 'shop' executed merger agreements prior to shareholder approval. Targets can negotiate for a 'go-shop' clause, which permits the solicitation of offers from other would-be acquirors during the 'go-shop'...

A principal-components analysis demonstrates that common earnings factors explain a substantial portion of rm-level earnings variation, implying earnings shocks have substantial systematic components and are not almost fully diversifiable as prior literature has concluded. Furthermore, the...

Do firm managers invest the savings from tax avoidance in positive net present value projects that enhance future profitability or divert them towards perquisite consumption, rent extraction, and value destroying projects? We indirectly investigate this question by testing whether tax avoidance...

Fair value accounting (FVA) has been blamed for amplifying the financial crisis of 2008-2009. We investigate investor and creditor reactions to policymaker deliberations, recommendations and decisions about FVA and impairment rules in the banking industry. If FVA was a key contributor to the...

This study provides evidence relevant for estimating and evaluating the terminal value term used in DCF valuation. Consistent with common practice, exit multiples based on EBITDA dominate those based on either net operating profit after tax (NOPAT) or net operating assets (NOA). However, both...

We investigate the impact of recurring fair value versus amortized cost measurement for accounting recognition purposes on the timeliness of insurers' other-than-temporary (OTT) impairments of non-agency residential mortgage-backed securities (NAMBS) around the 2007–2009 financial crisis....

Overproduction reduces cost of goods sold by spreading fixed costs over an inflated number of units. An estimate of the overproduction bias helps predict future profitability, and adjusting profitability measures to undo this distortion improves their explanatory power for future profitability....

Over the last thirty years there has been a strong positive trend in the magnitude of amortization charges, due to both economic and accounting changes. This trend has accelerated over the last decade, following the implementation of a revised accounting standard for business combinations....