Extant studies on the market reaction to acquisition announcements often assume that targets' private ownership mitigates acquirers' incentives and opportunities to finance acquisitions with inflated stocks. This view is supported by the observation that, although the average stock-for-stock...

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...

Subprime loans were disproportionately offered in minority areas prior to the subprime crisis, even after controlling for other determinants of loan costs. There are two potential explanations for this phenomenon. Lenders could have charged subprime rates in minority areas to compensate for...

Dividend payments are generally costly to shareholders. One principal reason for such payments is that they force managers to raise funds in the external capital markets to finance new projects, which presumably reduces their incentives to engage in empire-building activities. We posit that,...

There is a significant positive market reaction to merger announcements by acquiring firms that use lower quality external auditors. One explanation for the positive performance of these firms is that their cost-of-capital is reduced as a result of their voluntary submission to the intense...

There are at least two plausible explanations for the post-merger underperformance: information asymmetry and performance extrapolation. The first hypothesis maintains that acquirers are over-valued before the mergers, while the second one maintains that acquirers become over-valued as a result...

Abnormally high net insider selling is commonly observed after repurchase tender offer announcements even though firms experience, on average, positive abnormal returns in the years after the repurchases. We explore two potential explanations for this seemingly counterintuitive phenomenon. Under...

There is a positive association between stock-for-stock acquirers' pre-merger abnormal accruals and post-merger lawsuits. The probability of lawsuits is also negatively associated with both the market reaction to the merger announcement and the post-merger announcement long-term abnormal...

We analyze the effect of external financing concerns on managers' financial reporting behavior prior to management buyouts (MBOs). Prior studies hypothesize that managers intending to undertake an MBO have an incentive to manage earnings downward to reduce the purchase price. We hypothesize that...

We provide evidence suggesting that both the post-repurchase long-term abnormal returns and the reported improvement in operating performance documented in prior studies are driven, at least partly, by pre-repurchase downward earnings management, rather than genuine growth in profitability. The...