The accounting and financial scandals the last few years not only produced the Sarbanes-Oxley Act, but have prompted a good deal of debate what forces led to so many dramatic reporting failures. This article is the only work to examine how the competitive structure of the accounting industry...

This paper studies two distinct roles that transfer prices play within multinational enterprises operating in two tax jurisdictions. Assuming that the multinational enterprise chooses one transfer price for tax purpose and another for providing incentives to its subsidiary's manager, we analyze...

Based on a large survey of firms in Norwegian industry, in line with earlier studies, we find that the majority (68.7%) use some form of cost based pricing. In contrast to earlier studies, variable cost is the dominant cost base (32%). Only about 20% of firms use fully distributed cost compared...

We examine whether it is incentives or standards that determine firms' financial reporting quality using a natural experiment in Taiwan. Before 2001, Taiwan's Company Act required private firms with capital levels exceeding a certain threshold to file and publish audited financial statements....

Independence (in fact as well as in appearance) is widely thought to be necessary for the quality of audits, and audit quality is often equated with independence. Private incentives to demand (and supply) independent certification of financial statements are thought to be insufficient, thus the...

Two key assumptions underlying the regulation of U.S. financial reporting are the need to mandate the certification of financial statements, and to require that this certification be performed by independent auditors. Private incentives to demand (and supply) certification are thought to be...

Using a simulation analysis based on historical U.S. stock market returns, we assess the total tax burden (federal plus state) of active portfolio management. Our results show that taxes can erode a large portion of the profits, even for moderately intense trading strategies where the capital...

We examine a duopolistic setting in which firms pre-announce their future competitive decisions (e.g. prices, production quantities, capacity investments) before they actually undertake them. We show that firms overstate their future actions in their pre-announcements, and that their real action...

Investors have strong economic incentives to engage in unbiased information search in order to maximize the expected value of their investments. I examine whether an investor's psychological preference for information that supports his past investment decisions dominates his economic incentive...

Relevance of earnings for explaining equity prices is investigated by many value relevance studies. This study investigates whether fiscal year end earnings as a proxy for next period's earnings have additional information, beyond the information incorporated in contemporaneous equity price, for...