We construct a large sample of 21,608 firm-years with International Financial Reporting Standards (IFRS) adopters and non-adopters from 34 countries over the 1998-2004 period, and evaluate differences in the implied cost of capital between the IFRS adopters and the non-adopters. We also...

This study examines the relation between narrative risk disclosures in mandatory reports and the pricing of credit risk. In particular, we investigate whether and how the SEC mandate of risk factor disclosures (RFDs) affects credit default swap (CDS) spreads. Based on the theory of Duffie and...

In this paper, we first develop a model in which national legal environments play a crucial role in determining auditor effort and audit fees. Our model predicts that: (1) audit fees increase monotonically with the strength or strictness of a country’s legal liability regime; (2) given a legal...

We examine the consequences of local laws modeled on the American Anti-Corruption Act (“AACA”), which aims to constrain corporate political activities. Consistent with these laws significantly increasing the costs of forging local political connections, we find a reduction in the likelihood...

This paper shows that politically connected non-Big 4/5 auditors are associated with lower levels of audit quality (proxied by the level of abnormal non-core earnings and the proportion of modified audit opinions) than firms with no political connections. We also show that more economically...

This study investigates the relation between common institutional ownership along the supply chain and earnings management by supplier firms. Using a sample of U.S. publicly traded firms for the period of 1980–2016, we find that common ownership along the supply chain reduces the level of a...

We examine the association between real earnings management and the cost of new bond issues of U.S. corporations. We consider three types of real earnings management: sales manipulation, overproduction, and the abnormal reduction of discretionary expenditures. We find that overproduction impairs...

Using a sample of non-U.S. firms from 22 countries during 2003–2007, we examine the effect of firm-level governance on various features of loan contracting in the international loan market. We find that banks charge lower loan rates, offer larger and longer-maturity loans, and impose fewer...

This study examines whether real earnings smoothing influences equity and credit investors’ perceptions of risk. Using a large sample of U.S. public firms, we find that real earnings smoothing is negatively associated with option-implied volatility, suggesting that real earnings smoothing...

We investigate how local political corruption shapes corporate financial reporting conservatism. Using a large sample of U.S. public firms, we find that firms located in areas with higher levels of political corruption tend to adopt greater accounting conservatism. This finding is robust to...