This study examines companies with two classes of shares that entitle their holders to identical cash flow and voting rights but that are available to mutually exclusive sets of investors: A shares to domestic investors and B shares to foreign investors. Price differences between A and B shares...

Most proponents of using profit margins in a forecasting model suggest that unusual items be removed from income to create a quot;corequot; profit margin. We investigate the appropriateness of this assumption over short and long horizons. Specifically, we explore the association between profit...

We present a theory that poor matching manifests as noise in the economic relation of advancing expenses to earn revenues. As a result, poor matching decreases the correlation between contemporaneous revenues and expenses, increases earnings volatility, decreases earnings persistence, and...

We examine stock sales as a managerial incentive to help explain the discontinuity around the analyst forecast benchmark. We find that the likelihood of just meeting versus just missing the analyst forecast is strongly associated with subsequent managerial stock sales. Moreover, we provide...

This paper examines how one aspect of earnings quality - discretionary accruals - affects subsequent capital investment pattern and efficiency. We find that, conditional on investment opportunities, investment in fixed assets in period t is less sensitive to internal cash flows for firms with...

This paper examines whether proprietary costs influence privately held firms' financing choice between private placements and public offerings. The financing choice determines whether proprietary information revealed to investors is also available to competitors. Using hand-collected information...

A causal relationship between disclosure practices and cost of capital is difficult to establish because cost of capital reflects both disclosure practices (information risk) and fundamentals that are being disclosed (fundamental risk). To separate information risk from fundamental risk, this...