I analyze the effect of auditor choice on acquirers' values around merger announcements and the factors affecting the interaction between auditor size and the market reaction to merger announcements. I find that acquirers audited by non-Big 4 accounting firms outperform those audited by Big 4...

Prior studies suggest that managers use their reporting discretion to signal their private information. Because managers are often assumed to use their discretion to mislead investors, we conjecture that, without a second corroborating signal, discretionary accruals are likely to be regarded as...

This study shows that targeted banks that become acquirers generally overpay. The evidence suggests that bank mergers are effective devices against takeovers. Targeted banks that engage in acquisitions are less likely to be taken over than targeted banks that do not engage in acquisitions....

Regulators and shareholders generally oppose any restriction on clients' rights to sue their auditors, believing that such restrictions would impair reporting quality. However, the evidence suggests that the opposition to limitation of liability agreements (LLAs) between clients and auditors is...

A stochastic frontier regression model is used to test interest rate parity with bid-ask spreads for the Belgian franc, the Deutschmark, and the Swiss franc. The forward markets tested have become efficient in the sense that IRP holds well. The bounds provided by IRP do not appear to be binding,...

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...

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 show that firms with higher stock liquidity engage less in extreme (i.e., either overly aggressive or overly conservative) tax avoidance. The effect of stock liquidity on tax avoidance is economically meaningful, is robust across alternative measures of tax avoidance and stock liquidity, and...

While prior studies find that returns on option straddles are generally negative, we show that returns on straddles purchased prior to earnings announcements are actually positive. The earnings announcement impact is compounded when the pre-portfolio formation volatility is low (high) and the...

We find strong evidence that net insider selling is positively associated with future stock return volatility, consistent with insider selling increasing outside investors' uncertainty. The positive effect of net insider selling is significantly stronger when the volatility is measured around...