This study evaluates the importance of confirmatory bias and the representativeness in interpreting corporate earnings news. We find that: (i) confirmatory bias and the representativeness heuristic affect how analysts interpret earnings announcements; and (ii) confirmatory bias has greater...

Exploiting the staggered establishment of public audit oversight boards (POBs) worldwide and employing a difference-in-differences methodology, we find that patents and patent citations increase significantly following the implementation of public audit oversight. This is especially so in client...

Building on dynamic collusion theories, we predict that firms with less concentrated upstream or downstream industries have lower systematic risk because their supply chain partners tend to compete more aggressively during recessions, absorbing more of the adverse effect of aggregate shocks....

We replicate 469 anomaly variables similar to those studied by Hou, Xue, and Zhang (2020) using Chinese A-share data and a reliable testing procedure with mainboard breakpoints and value-weighted returns. We find that 83.37% of the anomaly variables do not generate significant high-minus-low...

Prior studies show that resource adjustment costs and managerial discretion are important in the cost management. Recent studies suggest that behavioral biases can influence managerial discretion. We examine whether irrational pessimism induced by terrorism affects the sensitivity of costs to...

We examine whether short sellers pay attention to textual information in annual reports in their shorting activities. We find that the presence of more weak modal words in annual reports is associated with greater shorting volume. Shorting volume directly driven by specificity terms and weak...

Using financial and ownership data from eight East Asian emerging markets before the Asian financial crisis, we document that while the sensitivity of a firm's capital investment to its cash flow decreases as the cash-flow rights of its largest shareholders increase, this sensitivity increases...

Japanese stock returns are even more closely related to their book-to-market ratios than are their U.S. counterparts, and thus provide a good setting for testing whether the return premia associated with these characteristics arise because the characteristics are proxies for covariance with...

This study examines the effect of firm-level corporate governance on the cost of equity capital in emerging markets and how the effect is influenced by country-level legal protection of investors. We find that firm-level corporate governance has a significantly negative effect on the cost of...