In this paper we examine the validity of using one-year-ahead cash flows prediction tests as a substitute for the value relevance test of earnings. We show theoretically that the R2 of the cash flows prediction regression is contaminated by the presence of (1) noise in the cash flows and (2)...

This paper provides evidence that firms that have consistently met or beaten analysts' earnings expectations (MBE) provide more frequent “bad news” management forecasts than firms with no established string of MBE, particularly when existing analyst forecasts are optimistic. This suggests...

The key role of corporate in-house legal counsel as a voluntary governance mechanism is to advise managers on various matters including regulations, legal issues, and litigation risk and to monitor managers' behavior against shareholders' interest. Using the in-house status of counsel as a proxy...