We examine whether Basu's (1997) differential timeliness metric and the related C-Score metric are effective in detecting predictable differences in conservatism surrounding corrections of overstated earnings. Cross-sectional and time-series analyses, employing 2,132 firms making restatements...

We examine whether Basu's (1997) differential timeliness metric and the related C-Score metric are effective in detecting predictable differences in conservatism surrounding corrections of overstated earnings. Cross-sectional and time-series analyses, employing 2,132 firms making restatements...

There is reliable evidence that managers smooth their reported earnings. If some firms manage earnings downwards (upwards) when they experience large positive (negative) earnings shocks and if investors have cognitive limits or are inattentive, then it is plausible that the post-earnings...

We investigate if timely loss recognition is associated with acquisition-investment decisions. Using a Basu (1997) piece-wise linear regression model, we find that firms with more timely incorporation of economic losses into earnings make more profitable acquisitions, measured by the bidder's...

This study investigates whether the voluntary disclosure of management earnings forecasts influences investors' assessment of firm risk and firm value. We find a significant negative relationship between the issuance of management earnings forecasts and a variety of measures of firm risk...

This paper examines changes in acquirer and target companies' Credit Default Swap (CDS) spreads as a proxy for default risk around official mergers and acquisitions (M&A) announce-ments. Related literature extensively documents wealth effects triggered by M&A from the shareholders' perspective,...

How does a public announcement about a company exploring its potential sale or merger (“strategic alternatives”) affect the company and its shareholders? This study provides the first look at some of the positive and negative consequences to this unique disclosure of strategic alternatives....

This study finds that pro-forma earnings forecasts by bidding firms during acquisitions are associated with a higher likelihood of deal completion, expedited deal closing, and with a lower acquisition premium − but only in stock-financed acquisitions. Analysts also respond to these forecasts...

Using plausibly exogenous variation in Chinese imports, we provide evidence that firms strategically announce capacity expansions when facing entry threats. We first construct and validate a novel text-based measure of voluntary disclosure that reflects firms' explicit forward-looking statements...

We document that firms are 80% more likely to issue non-earnings press releases during the earnings announcement period when delivering extremely negative earnings news. These non-earnings press releases are insufficient to improve negative announcement returns in isolation. However, if the...