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...

Initial public offering (IPO) companies are exempt from Section 404 of the Sarbanes-Oxley Act of 2002, leaving investors to assess the quality of an IPO company's internal controls, which affect the quality of management-provided financial information, without an opinion on internal controls...

The report looks at the costs and benefits of regulating SMEs' financial reporting, at why SMEs may require a different regime from other businesses, and at what research can tell us about these questions. It concludes that the evidence available to date is insufficient to develop policies that...

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...