We posit that, because incorporating the effect of accounting conservatism on earnings forecasts likely requires a higher degree of sophistication, the ability to adjust earnings forecasts for conservatism should vary across security analysts. Consistent with this conjecture, we find that less...

Large equity grants, the hallmark of 1990s executive compensation, allegedly contributed to the 1990s stock bubble by making managers especially sensitive to stock performance and leading them to inflate earnings. Regarding these heretofore untested claims, we show that earnings are inflated...

Managers of cash-rich firms who are contemplating an acquisition face a dilemma. On the one hand, if they finance the acquisition with cash, the market could presume that they undertake the acquisition simply because the firm has excess cash (the free cash flow hypothesis). On the other hand, if...

We examine whether the 2005 mandatory adoption of IFRS is followed by an increase in cross-border acquisitions into the adopting countries and whether the association is driven by IFRS per se or by concurrent enforcement changes. Using the exogeneity of a firm's listing status to identify the...

We analyze whether analysts sacrifice forecast accuracy for informativeness by examining: (1) the association between analysts' deviations from management guidance and earnings management; (2) the effect of the deviations on analyst forecast accuracy; and (3) the effect of the deviations on...

We posit that accounting conservatism could mitigate the value destruction associated with increases in cash holdings. Consistent with this conjecture, we find that the market value of an additional dollar in cash holdings increases in accounting conservatism. This result is robust to...

We examine the extent to which managers report opportunistically prior to corporate events by analyzing the association between the timing of stock swap announcements and completions and acquirers' reporting behaviors. Using the timing of merger announcements and completions to infer managerial...

We show that the number of governance provisions imposed on a firm by a strategic alliance partner decreases with the firm's accounting quality. This effect is weaker when the firm has greater bargaining power and stronger when the alliance project is riskier. Moreover, the net benefit to an...