This study develops a theory that predicts the lower the degree to which firms' earnings are correlated with the industry the greater the probability a firm will issue a biased signal of firm performance. The theory provides for causal predictions in our empirical tests in which we examine the...

Academics and practitioners frequently highlight that overall market and industry performance is an important aspect of a firm's profitability. However, few studies allow for the decomposition of a firm's profitability into market, industry, and idiosyncratic components, and those that do often...

This study develops a theory that predicts the lower the degree to which firms' earnings are correlated with the industry the greater the probability a firm will issue a biased signal of firm performance. The theory provides for causal predictions in our empirical tests in which we examine the...