This Professor Cunningham's Introduction to his edited collection of Warren Buffett's noted letters to shareholders of Berkshire Hathaway Inc. The collection was prepared for a symposium held at Cardozo Law School in New York City in 1997 and originally published in the Cardozo Law Review. The...

This paper examines whether stock option grants explain missed earnings targets, including reported losses, earnings declines and missed analysts' forecasts. Anecdotal evidence and surveys suggest that managers believe that missing an earnings target can cause stock-price drops (Graham, et al....

United States multinational corporations can delay financial statement recognition of U.S. taxes on repatriations by designating foreign subsidiary earnings as quot;permanently reinvestedquot; under APB Opinion No. 23. This paper examines 1) whether firms use the permanently reinvested earnings...

I present evidence consistent with managers using derivatives and discretionary accruals as partial substitutes for smoothing earnings. Using 1994-1996 data for a sample of Fortune 500 firms, I estimate a set of simultaneous equations that captures managers' incentives to maintain a desired...

We seek to document errors that could affect studies of earnings management. The case of earnings management in response to the book income adjustment (BIA) of the alternative minimum tax (AMT) offers a unique laboratory because the incentives to manage book income downward in 1987 appear so...

This paper studies the reliability of mandatory contingent liability disclosure. Contingent liabilities introduce substantial uncertainty about future earnings and the value of the firm, but little public data are available on the demands by external claimants. We use confidential audit...

New Zealand electric power boards were licensed by the Electric Power Board Act 1925 to supply electricity in defined geographical franchise areas. These entities were exempt from income tax until 1987 when their earnings were subject to the statutory corporate tax rate of 48 percent. This paper...

Prior studies that examine the effect of managerial incentives on investment or misreporting decisions typically hold firm characteristics constant and focus on a particular managerial incentive. However, managers' responses to different types of incentives likely depend on firm characteristics...

SFAS 109 allows firms to use their discretion to set arbitrarily high valuation allowances against deferred tax assets. Firms can then later use these quot;hidden reservesquot; to manage earnings. Our evidence indicates that most banks do not record a valuation allowance to manage earnings, but...

Two separate streams of research find evidence that firms decrease Ramp;D spending to meet earnings benchmarks and that the Ramp;D tax credit increases Ramp;D spending. However, these studies do not consider stock option exercises by Ramp;D employees which likely influence Ramp;D spending...