A premise of standard setters and of much empirical research is that improving the quality of accounting standards and their implementation increases information in capital markets. This paper challenges this premise and shows that there are situations in which “better”, i.e., more...

While internal control over financial reporting has gained increasing regulatory attention, its enforcement is far from perfect; thus firm-specific incentives to management become important to increase the quality of financial reports. We study how owners can motivate managers to invest in...

This paper examines how commonly used earnings quality measures fulfill a key objective of financial reporting, i.e., improving decision usefulness for investors. We propose a stock-price-based measure for assessing the quality of earnings quality measures. We predict that firms with higher...

The paper studies incentive effects of accruals used for performance measurement in short-term contracts, if an agent undertakes activities with long-term and short-term consequences. The paper characterizes the optimal depreciation method and shows that it is not consistent with the traditional...