Investment decisions frequently require coordination across multiple divisions of a firm. This paper explores a class of capital budgeting mechanisms in which the divisions issue reports regarding the anticipated profitability of proposed projects. To hold the divisions accountable for their...

We consider a sequential delegation setting where a firm delegates an investment decision and, subsequently, a sales decision to a privately informed manager. For both these decisions, corporate income taxes have real effects. We show that compensating the manager based on pre-tax residual...

I investigate how the use and voluntary disclosure of synthetic leases is affected by incentives to defer cash outflows and keep debt off the balance sheet. I find that managers of cash-constrained firms with incentives to defer cash payments are more likely to finance asset purchases with...

This paper has been revised into one subsequent SSRN working paper and another paper in progress.Popular press has argued that firms holding cash should be regarded highly by investors because firms will access good prospects. This view contradicts with the Jensen (1986) free cash flow...

A fundamental question in accounting is whether and to what extent financial reporting facilitates the allocation of capital to the right investment projects. Over the last two decades, a large and growing body of literature has contributed to our understanding of whether and why financial...

Theory suggests a commitment to voluntary disclosure may improve firm investment over time. Our findings support this argument. We document that voluntary disclosure commitment is associated with the more profitable exercise of firm investment opportunities. Additionally, prior research...

Residual income is a popular performance metric that is often calculated from financial accounting numbers. Practitioners argue that financial accounting earnings and book value suffer from various biases and should be adjusted prior to the residual income calculation so that the resulting...

This study provides international evidence that external financing dependence creates incentives for firms to undertake a higher level of voluntary accounting disclosure. For a sample of 856 observations from 34 countries and 18 different manufacturing industry sectors, we document that firms in...

Recent evidence suggests that managers use voluntary CAPEX guidance to stimulate market feedback by incentivizing informed trading in their stock prices. We show a related decrease in nondisclosing firms' informed trading measures. The reduction in informed trading is pronounced in unexpected...

The authors perform an original research on the fundamentals of winning virtuous strategies creation toward the leveraged buyout transactions implementation during the private equity investment in the conditions of the resonant absorption of discrete information in the diffusion - type financial...