This monograph is not a review of the empirical accounting literature. This monograph tells a story and relates it to salient empirical phenomena. Why does accounting exist? Our answer is that financial accounting helps firms function efficiently. That efficiency is manifested in many ways, and...

CEOs of S&P 500 firms that report high non-GAAP earnings relative to GAAP earnings receive more than $600 thousand in unexplained pay. The abnormally high pay appears even after controlling for the level of non-GAAP earnings and despite relatively weak GAAP performance and low returns....