Current practice regarding materiality in government audits under generally accepted auditing standards varies widely. In this empirical study, we investigate whether government auditors agree on an appropriate base for calculating materiality and what percentages they apply. In a government...

We provide evidence of the impact of Auditing Standard No. 2 (“AS 2”), issued pursuant to the Sarbanes-Oxley Act of 2002 (“SarBox”), on the outcome of auditors in financial reporting litigation. Specifically, we focus on the existence of financial restatements and how and why they...

Most studies of voluntary disclosure examine the securities market, where voluntary disclosure is incremental to the requirements of highly developed reporting standards. In this paper, I examine the market for new franchises, where there is no requirement that potential franchise investors be...

Reputation is a market mechanism widely believed to effectively resolve problems of asymmetric information. It relies, however, on consumers taking into account any available information on unobserved product characteristics (quality). Exploiting the natural experiment of Arthur Andersen's...

What drives investors' attention? We study how far in advance earnings calendars are pre-announced and find that investors are more attentive to earnings news when such details are disclosed well ahead of time. This variation in investors' attention affects stock prices, thereby creating...

We examine firms’ voluntary R&D disclosure under technology coopetition, focusing on technology standard setting organizations (SSOs). Technology coopetition is characterized by i) cooperation to determine technology standards, which requires information sharing to reach consensus, and ii)...

We investigate the relationship between the incentives of Japanese nonprofit organizations to avoid losing their tax-exempt status and the extent of tax-motivated expense allocation. In Japan, nonprofit organizations are deprived of tax-exempt status if the ratio of expenses of taxable...

Numerous rules mandate the disclosure of information. This article analyzes why such rules are enacted. Specifically, 1) why wouldn't firms voluntarily disclose their private information; and 2) given that voluntary disclosure would not be forthcoming, who has the incentive to lobby for...

This paper discusses the process being used in Bosnia to convert the books of Bosnian enterprises so that they will comply with the new Bosnian accounting standards, which are identical to International Accounting Standards. Bosnian accountants were generally not familiar with the new rules,...

Managers must constantly scan a sea of new information and judge (1) if this information is relevant to evaluating the firm’s strategy (i.e. information relevance judgments), and (2) if this information suggests the firm’s strategy is appropriate or inappropriate (i.e. strategy...