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We argue that earnings management and fraudulent accounting have important economic consequences. In a model where the costs of earnings management are endogenous, we show that in equilibrium, low-productivity firms hire and invest too much in order to pool with high productivity firms. This...
Persistent link: https://www.econbiz.de/10004998194
We argue that earnings management and fraudulent accounting have important economic consequences. In a model where the costs of earnings management are endogenous, we show that in equilibrium, bad managers hire and invest too much in order to pool with the good managers. This behavior distorts...
Persistent link: https://www.econbiz.de/10005061582
Persistent link: https://www.econbiz.de/10005478085
This paper examines the prevalence of informed trading in corporate bonds prior to takeover announcements. We find significant pre-announcement trading activities and price movements in target bonds, in directions consistent with the nature of pending information. Improved transparency in the...
Persistent link: https://www.econbiz.de/10010869370
We investigate a prominent allegation in congressional hearings that Moody׳s loosened its rating standards to chase revenue after it went public in 2000. Consistent with this allegation, Moody׳s ratings for both corporate bonds and structured finance products are significantly more favorable...
Persistent link: https://www.econbiz.de/10011039261
Persistent link: https://www.econbiz.de/10005061834
Diversified firms trade at a discount relative to similar single-segment firms. We argue in this paper that this observed discount is not per se evidence that diversification destroys value. Firms choose to diversify. Firm characteristics, which make firms diversify might also cause them to be...
Persistent link: https://www.econbiz.de/10005021723
We examine the determinants of debt issuance in 10 major currencies by large U.S. firms. Using the fraction of foreign subsidiaries and tests exploiting the disaggregated nature of our data, we find strong evidence that firms issue foreign currency debt to hedge their exposure both at the...
Persistent link: https://www.econbiz.de/10005832998
Persistent link: https://www.econbiz.de/10005213812
This paper argues that the documented discount on diversified firms is not per se evidence that diversification destroys value. Firms choose to diversify. We use three alternative econometric techniques to control for the endogeneity of the diversification decision, and find evidence supporting...
Persistent link: https://www.econbiz.de/10005162127