Real earnings management (REM) practices are related to subsequent stock returns. Specifically, stocks of firms with abnormally low (high) levels of operating cash flows underperform (outperform) in the subsequent year, whereas stocks of firms with abnormally low (high) levels of production...

This paper investigates the impact of earnings management on market return (by the proxies of discretionary accruals and earnings response coefficient/CAR regarded as accounting and market based earnings quality, respectively,) along with a number of moderating (both governance and financial)...

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 exploit information in option prices in order to study whether the ex post responsiveness of tock prices to earnings information is reflected from an ex ante, firm- and quarter-specific perspective. Specifically, we develop a measure of anticipated information content (AIC) that isolates the...

This paper constructs a signal-based composite index, namely ESCORE, which captures the context of earnings management. Specifically, ESCORE aggregates 15 individual signals related to earnings management based on prior relevant literature. Empirical results using UK data shows that when ESCORE...

We investigate whether firms “lean against the wind,” i.e., manage earnings upward to offset aggregate (market wide) undervaluation, by examining how firm-specific measures of earnings management correlate with aggregate market conditions. Leaning against the wind has been proposed by prior...

Managers appear to inflate non-investment accruals and then adjust financing decisions to capitalize on such inflation. Using a large sample of corporate seasoned equity offerings (SEOs) for the period 1972 - 2017, we find that firms which adjust non-investment accruals to inflate pre-issue...

This paper studies the impact of public audit oversight on financial reporting credibility. We analyze changes in market responses to earnings news after public audit oversight is introduced, exploiting that the regime onset depends on fiscal-year ends, auditors, and the roll-out of auditor...

The implementation of the new revenue recognition standard (ASC 606) has significantly changed the impact of earnings announcements on various measures of market quality and trading activities. In contrast to prior research findings, we show that earning announcements are accompanied by a...

This study examines the relationship between bond fund flows, stock market returns and financial policies in developed and developing economies. The findings suggest a bidirectional (negative) relationship between bond flows and market returns in the presence of fiscal and monetary policy for...