We consider a setting in which insiders have information about income that outside shareholders do not, but property rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent with outsiders' expectations based on publicly...

We develop a theory of income and payout smoothing by firms when insiders know more about income than outside shareholders, but property rights ensure that outsiders can enforce a fair payout. Insiders set payout to meet outsiders' expectations and underproduce to manage downward future...

We study how informed, strategic trading affects audit quality and investment efficiency. With the auditor's legal liability payment based on the decrease in the market price after an audit failure, informed trading provides a hedge to the auditor against legal liability risk. This weakens...

We develop a theory of income and payout smoothing by firms when insiders know more about income than outside shareholders, but property rights ensure that outsiders can enforce a fair payout. Insiders set payout to meet outsiders' expectations and underproduce to manage future expectations...

Using a dataset covering 3 million commercial borrower financial statements, we document a substantial, nearly monotonic decline in banks’ use of attested financial statements (AFS) in lending over the past two decades. Two market forces help explain this trend. First, technological advances...

Corporate governance is a set of functional processes and structures established by the leadership of the organization in order to inform, direct and monitor lead activities in order to achieve predetermined objectives. Efficient and effective corporate governance involves goals, long-term...

Earnings include amounts resulting from the removal of fixed assets and long-term average. The definition also includes income and unrealized gains, for example, those resulting from the revaluation of investment securities and those resulting from the increase in book value of assets within...

There is the possibility that the information on which basis the informational risk hasbeen identified and evaluated, not to be correct and impicitly the financial statements not to be inconformity with the represented reality, affecting in this way the objective of the ‘trustworthyimage‘....