We reexamine the relationship between accounting conservatism and the profitability and risk of acquisitions, by comparing acquisition-related profitability and risk before and after SFAS 142 (2001). SFAS 142 eliminated the periodic amortization of goodwill, replacing it with an annual fair...

Managerial estimates are ubiquitous in accounting: most balance sheet and income statement items are based on estimates; some, such as the pension and employee stock options expenses, derive from multiple estimates. These estimates are affected by objective estimation errors, as well as by...

Over the last decade, U.S. firms have used their large cash holdings to buyback shares and pay dividends, instead of investing in R&D activities that can spur future growth. One possible reason for this behavior is that R&D activities — yielding new products and services or cost reductions —...

In recent years, quarterly earnings guidance has been harshly criticized for inducing managerial short-termism and other ills. Managers are, therefore, urged by influential institutions to cease guidance. We examine empirically the causes of such guidance cessation and find that poor operating...

We examine in this study the relevance to investors of information on the capitalization of software development costs, as promulgated in 1985 by the Financial Accounting Standards Board in its Statement No. 86 (SFAS 86). We find that software capitalization is value-relevant to investors: The...

The valuation of initial public offerings (IPOs) is of considerable interest, given the important role these enterprises play in economic growth and investors' decisions. IPO valuation is particularly challenging due to the meager information available about new enterprises at offering dates. We...

In this paper we propose a measure of managerial ability, based on managers' efficiency in generating revenues, which is available for a large sample of firms and outperforms existing ability measures. We find that our measure is strongly associated with manager fixed effects, and that the stock...

We examine the value relevance of accounting-driven losses that result from the immediate expensing of firms’ internally-generated intangible investments vs. losses occurring irrespective of intangible investments. Contrary to the long-held view that losses are irrelevant for valuation, we...