This study explores the impact of societal trust on the economic behavior of nonprofit organizations. Although prior studies reveal that trust has a positive impact on the economic behavior of for-profit firms, the institutional differences between the two organization types make it unclear...

This paper examines the implications of the option value of equity for firms' disclosures. Merton (1974) shows that the equity of levered firms is equivalent to a call option whose value increases in the expected variance of future cash flows. I use this equivalence to calculate firms' vega,...

We develop a comprehensive measure of the quality of corporate financial communication. Net bad flows (NBF) captures bad news withholding and is calculable for all listed companies using daily stock return data. NBF indicates the relative lumpiness of bad news flows during the fiscal period. We...

A data processing procedure, DEA (Data Envelopment Analysis) is described as as an analytical tool in audit engagement. DEA receives data inputs from from financial statements of a plurality of clients, constructs efficiency frontiers and evaluates relative income efficiencies. DEA can be used...

We investigate whether income smoothing affects the usefulness of earnings for contracting through the monitoring role of earnings-based debt covenants. First, we examine initial contract design and predict that income smoothing will increase (decrease) the use of earnings-based covenants if...

We examine the influence of common ownership on commonalities in the information environment. Specifically, we study commonalities in financial statements and in the actions of key agents such as financial analysts and firm managers who contribute and respond to the information environment....

We investigate whether income smoothing affects the usefulness of earnings for contracting through the monitoring role of earnings-based debt covenants. First, we examine initial contract design and predict that income smoothing will increase (decrease) the use of earnings-based covenants if...

Focusing on the Spanish setting, traditionally characterized by high ownership concentration and a regulatory framework which has traditionally given more priority to the avoidance of proprietary and competition costs related to segment disclosures than promoting transparency, this paper aims to...

We provide empirical evidence that the level of the dividend signals long-horizon future earnings and that the earnings information embedded in the dividend has implications for expected returns. From an earnings information perspective, we show the level of the dividend is associated with up to...

Firms make extensive use of operating leases, but unlike other types of debt, their balance sheet value is set by the firm. Using novel information on operating leases from new reporting requirements (ASC 842) we examine firm behavior in valuing these leases, specifically, discount rate choices....