This study examines the impact of auditor quality on debt covenants. We conjecture that high-quality auditors have two related effects on debt covenants: (i) they encourage fewer and less restrictive covenants by providing assurance to lenders at contract inception and, consequently, (ii) they...

This paper examines how firm growth conditions the pricing of discretionary accruals. Given the rich growth opportunities and high information asymmetry in high-growth firms, we expect that managers have incentives to use discretionary accruals, especially income increasing (positive)...

Francis (2011) calls for more research on “the effect of audit quality on economic outcomes.” We respond by examining whether high-quality auditors reduce stock price crash risk, an important consideration for stock investors. We argue that high-quality auditors reduce crash risk because of...

Purpose – This paper aims to examine the research questions: Do executive and non-executivedirectors face similar labor market penalties upon revelation of accounting fraud? Are all executivedirectors treated by markets as a homogenous group? Or, do executive directors who are top managersface...

The late 1990's have seen the emergence of the individual investor. The most celebrated fact associated with this phenomenon may be the increasing use of online investing by individual investors. The rapid emergence of online brokerages, with their increasing market values relative to full...

We assess the stock market reaction to proposals of incentive plans for directors in a sample of 289 firms. The reaction is both economically and statistically insignificant. This result suggests that shareholders do not necessarily benefit from the adoption of such plans. Across firms, we find...