This paper examines the association between patterns of increasing earnings and incremental firm value as reflected by earnings multiples, holding level of income constant. As predicted, we find firms exhibiting patterns of increasing earnings have larger earnings multiples than other firms and...

Viewing equity as a call option on the firm's assets with a strike price equal to contractual debt obligations yields an asymmetric prediction on how debt and equity markets view sustained growth. Debt holders are expected to benefit from sustained growth when the default risk is high, while...

We report survey evidence about 515 experiences that auditors have had with clients who they identified as attempting to manage earnings. This approach enables us to analyze separately managers' decisions about how to attempt earnings management (quot;EMquot;) and auditors' decisions about...