This paper examines the Parmalat case, with particular regard to the accounting and corporate governance issues which caused the scandal. The aim of the paper is to understand why the financial reporting system and the corporate governance system have failed in the Parmalat case. It describes...

Recent reports in the business press allege that managers take actions to avoid negative earnings surprises. I hypothesize that certain firm characteristics are associated with greater incentives to avoid negative surprises. I find that firms with higher transient institutional ownership,...

We investigate the effects of missing quarterly earnings benchmarks on the CEO's annual bonus. After controlling for the general pay-for-performance relation, we find a significant incremental adverse effect on CEO annual cash bonuses when the firm's quarterly earnings fall short of the...

SEC Chairman Arthur Levitt has recently expressed concerns about the use of earnings management to meet Wall Street earnings expectations set by analysts' forecasts. We investigate whether managers aim to quot;meet or beatquot; analysts' forecasts and examine the influence of analysts' forecast...

I test a market consensus hypothesis about earnings management in the banking industry. This hypothesis states that when analysts have reached a consensus in their earnings forecasts, managers have an incentive to manage earnings through the use of discretionary accruals to achieve market...

Crowdsourcing — when a task normally performed by employees is outsourced to a large network of people via an open call — is making inroads into the investment research industry. We shed light on this new phenomenon by examining the value of crowdsourced earnings forecasts. Our sample...

This paper explores directly the effect of internal control weakness (hereafter ICW) and their remediation on information precision for firms who filed Section 404 reports with the SEC. Our proxies for information precision are drawn from Barron et al. (1998). First, we find that the presence of...

This paper examines the classification of items within the income statement as an earnings management tool. Evidence is consistent with managers opportunistically shifting expenses from core expenses (cost of goods sold and selling, general, and administrative expenses) to special items. This...

We examine whether UK firms engage in earnings management or forecast guidance to ensure that their reported earnings meet analyst earnings expectations. We explore two earnings management mechanisms: a) positive abnormal working capital accruals and b) classification shifting of core expenses...

Rules implemented by the U.S. Securities and Exchange Commission in 2003 impose additional disclosure and filing requirements on firms publicly disclosing non-GAAP earnings. We find the regulations produced (1) modest declines in the frequency of special- and other-item exclusions, (2) a decline...