This paper investigates whether the pattern of quarterly earnings changes provides a signal of earnings management. We identify firms for which the sign of (seasonal) earnings changes observed in interim quarters reverses in the fourth quarter. We hypothesize that a firm performing poorly in...

We examine the effect of earnings surprises on changes in information asymmetry. We hypothesize and find that asymmetry is lower (higher) in the quarter following positive (negative) earnings surprises compared to firms that meet the consensus analyst earnings forecast. The relations between...

I investigate the determinants and economic consequences associated with financial reporting quality. I find evidence of a positive association between investors' demands for firm-specific information and financial reporting quality. In addition, the evidence suggests that higher proprietary...

Past research has shown that the level of operating accruals is a negative cross-sectional predictor of stock returns. This paper examines whether the accrual anomaly extends to the aggregate stock market. In contrast with cross-sectional findings, there is no indication that aggregate operating...

I investigate the determinants and economic consequences associated with firms' financial reporting choices. Recognizing the endogeneity associated with these choices, I find evidence of a positive association between investors' demands for firm-specific information and financial reporting...

Consistent with prior studies, this study shows that extremely negative and extremely positive earnings surprises in the fourth quarter have lower levels of persistence than those in the first through third fiscal quarters. Furthermore, extremely negative earnings surprises in the fourth fiscal...

We propose that earnings management is driven by the prevailing investor demand for earnings surprises. Managers cater to investors by inflating earnings in periods when investors react optimistically to positive earnings surprises relative to negative earnings surprises and report more...

Prior research finds little substantial discount for managing earnings to beat analysts' consensus forecasts, but at the earnings announcement date a minority of firms disclose balance sheet data needed to estimate abnormal accruals. We consider whether the market reward for beating the forecast...

Prior studies on the incremental predictive ability of accrual models over cash flow models with respect to future cash flows have led to conflicting results. This paper presents an accrual-based cash flow prediction model based on a random walk in cash flows adjusted for the reversal of current...

The synthetic lease is a hybrid financing structure that allows a company to obtain many of the benefits of asset ownership, including capital lease treatment for tax purposes, while treating lease payments as operating expenses on the firm's income statement. Proponents of these off balance...