Prior studies report negative or insignificant relations between conditional conservatism and the cost of equity capital, arguing that conservatism reduces information risk. Using accounting-based conditional conservatism proxies, however, we find a significantly positive association between...

We examine whether adoptions of International Financial Reporting Standards (IFRS) enhance capital investment efficiency as measured by investment-cash flow sensitivity and value-enhancing risk taking for a comprehensive sample comprised of 10,340 mandatory and voluntary IFRS adoptions across 26...

Associations between accounting earnings and stock returns are modeled and tested by examining relationships between earnings response coefficients and industry structure characteristics. Response coefficients are estimated using a new approach that does not require proxies for market earnings...

We present evidence that managerial responses to voluntary clawback adoptionsdepend on compensation incentives that can induce capital investment mix shifts and reducecapital investment efficiency. Specifically, we find that managers incentivized by high levels ofperformance-based pay and...

We test predictions that managers issuing voluntary capex guidance learn from analyst feedbackand that this learning enhances investment efficiency and firm performance (Langberg andSivaramakrishnan, 2010). Our findings are consistent with these predictions. First, we find thatmanagers' capex...

For a large sample of U.S. listed firms, we find that unconditional and conditional accounting conservatism help lower bankruptcy risk. We further find that the mitigating effect of accounting conservatism on bankruptcy risk functions via cash enhancement and earnings management mitigation...

Prior evidence that higher quality financial reporting improves capital investment efficiency leaves unaddressed whether it reduces over- or under-investment. This study provides evidence of both in documenting a conditional negative (positive) association between financial reporting quality and...

Economic reasoning suggests that capital follows profitability. This study introduces into residual income valuation quot;capital follows profitabilityquot; investment dynamics whereby capital investments are guided by the profitability of underlying investment opportunities. These investment...

Auditing researchers face a complex decision setting. Numerous factors must be considered in defining a research question, in choosing an experimental design and in obtaining and evaluating data. Researchers and practitioners alike need to be familiar with alternative research strategies. This...