We develop a comprehensive measure of the quality of corporate financial communication. Net bad flows (NBF) captures bad news withholding and is calculable for all listed companies using daily stock return data. NBF indicates the relative lumpiness of bad news flows during the fiscal period. We...

We measure annual report commentary articulating entities' business model and strategy, and then examine the capital market effects of enhancing such disclosure. Our empirical disclosure proxy is based on n-grams drawn from popular strategy textbooks and the academic strategy literature....

We study changes in the number of CEO stock option grants. Motivated by evidence of rigidity in stock option grants, we first provide a detailed description of the main aggregate trends in CEO stock option grants. We then consider the cross-sectional heterogeneity in option-granting activity and...

We examine whether UK firms engage in earnings management or forecast guidance to ensure that their reported earnings meet analyst earnings expectations. We explore two earnings management mechanisms: a) positive abnormal working capital accruals and b) classification shifting of core expenses...

We hypothesise and test for a U-shaped relation between the cost of equity capital and the level of disclosure in annual report narratives. Using a computer-generated word-count-based index of the level of disclosure in U.K. annual report narratives, we document a negative relation with the cost...

The purpose of this paper is to examine whether earnings quality contributes to the book-to- market's predictive power in the cross section of stock returns. Earnings quality is embedded in the value-growth effect given that retained earnings is a key part of the book value of equity. Earnings...

We examine whether, and to what extent, investors focus on salient and easy-to-process features in responding to analyst forecasts. We focus on rounding as arguably the most salient forecast feature. We find that while rounding is only marginally associated with forecast accuracy, investors...

We compare the performance of machine learning algorithms and wordlists at replicating manual coding of sentence-level tone and attribution in earnings press releases. We train learning algorithms on a sample of manually annotated performance sentences and assess accuracy using a separate...

This study explores the market response to achieving analyst earnings expectations, distinguishing between expectations achieved through earnings forecast guidance and earnings management. We consider three earnings management tools: real earnings management, working capital accruals management,...