We explore the role of stock liquidity in influencing the composition of CEO annual pay and the sensitivity of managerial wealth to stock prices. We find that as stock liquidity goes up, the proportion of equity-based compensation in total compensation increases while the proportion of...

The proposed new SEC (2022) rules suggest that the information risk may be unusually high for companies going public by merging with SPACs (“SPAC-IPOs”). We study the merits of this “information risk” hypothesis and then examine whether the high information risk also explains...

The SEC's emphasis on the use of plain English is designed to make disclosures more readable and more informative. Using an experiment, I find that more readable disclosures lead to stronger reactions from small investors, so that changes in valuation judgments are more positive when news is...

This paper examines the effect of income smoothing on information uncertainty, stock returns, and cost of equity. I show that income smoothing through both total accruals and discretionary accruals tends to reduce firms' information uncertainty, as measured by stock return volatility, analyst...

Many recent studies explore how earnings properties such as opacity, conservatism, and comparability relate to stock price crash risk. Motivated by the importance of earnings guidance as a voluntary disclosure mechanism that directly provides new information to the market, we investigate how...

This paper conducts an empirical investigation of the relationship between information asymmetry and real activities manipulation. When information asymmetry is high, stakeholders do not have sufficient resource, incentives, or access to relevant information to monitor manager‘s actions, which...

Since the opening of China’s securities market, there have been a number of bull and bear cycles. This paper discusses how executives use the market timing approach to manage earnings in different cycles to maximize firm value. We find that Chinese listed companies choose to release more...

We find a positive association between short-selling and accruals during 1988-2009, and that asymmetry between the long and short sides of the accrual anomaly is stronger when constraints on short-arbitrage are more severe (low availability of loanable shares as proxied by institutional...

This study explores insider trading as a function of differences between managers' and the market's assessment of company earning components - specifically operating cash flows and accruals. It extends prior research by more comprehensively studying earnings components. It also builds a...

This paper investigates whether the decision to issue a management earnings forecast is related to information asymmetry in the market for the firm s stock and whether the forecasts reduce the asymmetry. Theoretical models hold that a portion of the bid-ask spread arises because of asymmetric...