In this study, we consider whether the market conditions its reactions to a senior executive s (SE) move from an origin company (OC) to a destination company (DC) onthe SE s past performance and any other information impounded in the market reaction to the SE s emigration from the OC. We also...

On December 16, 2004, the Financial Accounting Standards Board published FASB Statement No. 123 (revised 2004), which significantly changes the accounting for employee stock options. Under the new standard, equity-based compensation results in a cost to the issuing enterprise and should be...

Consider the following puzzle: If earnings management is harmful to shareholders, whydon't they design contracts that induce managers to reveal the truth? To answer this question, we model the shareholders-manager relationship as a principal-agent game in which the agent (the manager) alone...

Valuation requires the prediction of future growth rate of persistent earnings, whichdepend on past and present internal, unobservable, investment decisions. In this study, we investigate the acirc;not;Smanagementacirc;not;? of the series of growth rates in a multi-period principal-agent model...

Rule l0b-5 of the 1934 Securities and Exchange Act allows investors to sue firmsfor misrepresentation or omission. Since firms are principal-agent contracts between owners contract designers - and privately informed managers, owners are the ultimate firms' voluntary disclosure strategists. We...

Numerous principal-agent situations of interest to accounting involve limited liability by the agent. We explore this issue when the outcome is mutually observable (MOC) and when it is not and the contract is based instead on the agent s report (NCC). We find that when outcome is not observable,...

Recently, a growing body of literature has suggested that financial statements have lost their value relevance because of a shift from a traditional capital-intensive economy to a hightechnology, service-oriented economy. These conclusions are based on studies that find a temporal decline in the...

The fact that auditors are paid by the companies they audit creates an inherent conflict of interest with investors who rely on the audit report in their capital allocation decisions. We analyze how the provision of financial statement insurance could eliminate this conflict of interest and...

Recently, a growing body of literature has suggested that financial statements have lost their value relevance because of a shift from a traditional capital-intensive economy to a hightechnology, service-oriented economy. These conclusions are based on studies that find a temporal decline in the...