We measure managerial affective states during earnings conference calls by analyzing conference call audio files using vocal emotion analysis software. We hypothesize and find that when managers are scrutinized by analysts during conference calls, positive and negative affect displayed by...

General evidence exists to indicate that managers manage earnings at three common earnings thresholds: analyst forecasts, prior period earnings, and zero earnings. We examine one market-based motivation suggested for this behavior. If managers perceive the market penalty for barely missing an...

Valuation theory, investment managers, financial analysts, and textbooks advocating horizontal financial statement analysis suggest that the change in earnings growth (earnings acceleration) conveys value relevant information. We test this assertion using a large sample of U.S. firms. Results...

In this paper I investigate whether analysts' target price forecasts (TPFs) provide investors with useful direction after material accounting misstatements. I examine the magnitude, informativeness, and accuracy of analysts’ TPF revisions after misstatements. First, analysts revise their TPFs...

This study provides descriptive evidence on the controversial trend adopted by many firms in recent years of reporting earnings figures on a "pro forma" basis. Pro forma earnings exclude normal income statement items that managers deem to be nonrecurring or nonrepresentative of ongoing...

We predict and find that regulations expected to harmonize and strengthen firms' financial reporting in the European Union (EU) in the early 2000s increase Tobin's Q ratios of firms with high agency costs due to (a) concentration of control (entrenchment) and (b) an excess of the largest...

This paper investigates the role of earnings per share management in the decision to repurchase shares. We identify the conditions under which repurchases increase EPS and document the frequency of EPS increasing and EPS decreasing repurchases among U.S. firms from 1988 to 2001. We then compare...

Despite a belief among corporate executives that smooth earnings paths lead to a lower cost of equity capital, I find no relation between earnings smoothness and average stock returns over the last 30 years. In other words, owners of firms with volatile earnings are not compensated with higher...

We examine the relation between analyst coverage and accruals quality. Because accrual accounting requires managers to estimate the future economic consequences of current events, accruals reflect estimation errors and potential managerial opportunism. This may lower accruals quality and provide...