This paper examines whether proprietary costs influence privately held firms' financing choice between private placements and public offerings. The financing choice determines whether proprietary information revealed to investors is also available to competitors. Using hand-collected information...

This paper studies how an accountant's method of aggregating information in a financial report is affected by differences in the reliability and relevance of components of the report. We study a firm that hires an accountant to produce a report that reveals information to investors regarding the...

We examine insider trading activities around financial restatement announcements and find strong evidence of informed trading by insiders. Focusing on the association between net insider selling and restatement announcement abnormal returns, we provide evidence of net insider selling before the...

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...

In this paper we examine whether and how accounting information about a firm manifests in its cost of capital, despite the forces of diversification. We build a model that is consistent with the CAPM and explicitly allows for multiple securities whose cash flows are correlated. We demonstrate...

Many small firms face significant challenges in improving visibility and attracting investors to their stock. One response to these challenges is to initiate an investor relations (IR) program. Through interviews and surveys with IR professionals, we learn that the IR process focuses on...

Strategic disclosure, which we define as the reporting of good news and the withholding of bad news, provides an explanation for a well-documented dynamic pattern in returns: The negative relation between return shocks and conditional return volatility. Black (1976) dubbed this relation the...

In this paper, we establish a link between information quality, firms' capital investment decisions and their cost of capital. We characterize asset prices in a market equilibrium framework with perfect competition for firm shares and derive a pricing equation that is equivalent to the CAPM....

We examine the effect of Regulation FD on stock return volatility. Critics suggest FD has increased volatility by causing firms to (a) disclose less information, resulting in increased noise trading and pricing errors; or (b) substitute essentially continuous communication to the market through...

The relationship between disclosure quality and cost of equity capital is an important topic in today's economy and generally, economic theory and anecdotal evidence suggest a negative association. Empirical work on this link, however, is confronted with major methodological drawbacks - neither...