Why do 60% of target boards voluntarily solicit and pay for seemingly worthless 'Texas-wide' fairness opinions while 40% of their peers do not? Our new insight is that target boards speak to more than one shareholder generation through fairness opinions. We model fairness opinions as a...

We examine the market reaction to a sample of 403 restatements announced from 1995 to 1999. We document an average abnormal return of about -9 percent over a two-day announcement window. We find that more negative returns are associated with restatements involving fraud, affecting more accounts,...

This article analyzes the impacts that three alternative damage apportionment rules have an owner?s financial reporting decision, an auditor?s audit quality choice, and investors? pricing decisions within the context of a perfectly competitive securities market and owner solvency constraints....

The Private Securities Litigation Reform Act (PSLRA) increases restrictions on private litigation for securities fraud. We examine stock price reactions on legislative-event-related days of firms in four high-litigation-risk industries. Two other studies on this issue, Spiess and Tkac (1997)...

The paper investigates how auditor resignations affect capital market participants' perception of firms from which the auditors resign (quot;former clientsquot;) and of firms that continue as clients of the resigning auditor (quot;continuing clientsquot;). We find that resignation announcements...

This Essay examines the stock market's reaction to the Ninth Circuit's decision in re Silicon Graphics Securities Litigation. That decision adopted the most stringent interpretation of the Private Securities Litigation Reform Act's quot;strong inferencequot; standard for pleading scienter in...

This study examines whether auditors can effectively use nonfinancial measures to assess the reasonableness of financial performance and, thereby, help detect financial statement fraud (hereafter, fraud). If auditors or other interested parties (e.g., directors, lenders, investors, or...

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...

Prior research has demonstrated an association between the magnitude of accrual anomaly-related trading returns and accrual reliability. This study first demonstrates an association between audit quality and accrual reliability. It then links this result and the prior literature to demonstrate...

This study examines whether audit committee and board characteristics are related to earnings management by the firm. The motivation behind this study is the implicit assertion by the SEC, the NYSE and the NASDAQ that earnings management and poor corporate governance mechanisms are positively...