We provide evidence on the determinants of the choice of an industry specialist auditor and the effect of this choice on cost of equity for a sample of firms that are audited by Big N auditors. We find that firms with more severe conflicts of interest between managers and shareholders are more...

Experimental Markets were used to examine whether individual probability judgment biases affect market prices. This issue is important to accountants because users of accounting information (especially investors) face competitive market environments. The expectation was that it would be more...

This study shows that the information content of FX transactions depends on the identity of market participants. Using spot FX transactions of a major Australian bank, we find that central banks have the greatest price impact, followed by non-bank financial institutions (NBFIs) such as hedge...

The paper contrasts theories that explain diverse belief by asymmetric private information (in short PI) with theories which postulate agents use subjective heterogenous beliefs (in short HB). We focus on problems where agents forecast aggregates such as profit rate of the Samp;P500 and our...

A standard result in the voluntary disclosure literature is that when the manager's private information is a signal correlated with the firm's liquidation value, mandatory disclosures substitute for voluntary disclosures. In this paper, we assume that the manager's private information...

We use buy and sell signals derived from insider trading disclosures to identify experimental-group cases in which decreases in earnings-related predisclosure information asymmetry have arisen through the use of the disclosures. For each experimental firm, each earnings-announcement date is...

Under the US tax system, dividends are historically taxed at a higher rate than capital gains and thus incur a tax-related penalty. I provide evidence that the dividend tax penalty partially offsets the positive signaling and agency cost effects of dividends for fully taxable individual...

There are many anomalies beyond the explanation capacity of CAPM and APT. Miller and his successive researchers shed some lights on the effects of trading, but their short constraints assumption and partial equilibrium analysis rule out the contributions of pessimists to asset prices. Without...

This study investigates the effects on firm values of costs and benefits associated with capital restructuring through publicly traded partnerships (PTPs). Potential motives for corporate capital restructuring include improved reinvestment decisions, improved asset management, reduced...

Extreme adverse selection arises when private information has unbounded support, and market breakdown occurs when no trade is the only equilibrium outcome. We study extreme adverse selection via the limit behavior of a financial market as the support of private information converges to an...