We examine the value of changes in U.S. investors' perceptions of audit quality by analyzing the market reaction to the first public revelation of liability limiting agreements (LLAs) in audit engagement letters of publicly traded firms. The revelation of the existence of LLAs in audit...

Firms respond to laws increasing employee protection by reducing both employment and capital expenditures. They use earnings management to meet earnings benchmarks less while experiencing significantly higher returns on investments, suggesting that employee protection potentially constrains...

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 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...