This paper reviews, synthesizes, and critiques the capital market literature examining trading volume around earnings announcements and other financial reports. Our purposes are to assess what we have learned from examining trading volume around these announcements and to suggest directions for...

Distorted prices misguide managerial incentives and resource allocation. Distorted prices may occur when firms' stock prices are near their 52-week highs because investors tend to perceive the stocks as relatively overvalued and are reluctant to bid prices higher even if new information warrants...

In their joint framework project, the FASB and the IASB recently proposed dropping stewardship as one of the objectives of financial accounting, because the Boards view stewardship and valuation usefulness as compatible sub-objectives ranking under an overall objective of decision usefulness....

Restatements create significant problems and uncertainties for the general investors. The goal of this paper is to provide a deeper understanding of how investors use financial statements information to help in their capital allocation decisions. In particular, our study contributes to the body...

This paper assesses the extent of stock asymmetric information by considering the relationship between stock returns and prices. We generalize Grossman, Sanford J. and Joseph E. Stiglitz model (1980) in a multi-asset setting and show that larger asymmetric information engenders stronger,...

The purpose of this paper is to investigate the change in quality of the information environment pre- and post-Enron. We test whether the reputations of all auditors declined as a result of Enron. The impact on the market risk premium is also examined. An information processing model is...

Structural models produce credit spreads which are too low relative to those observed in the market. This problem is particularly relevant for: i) short maturities; ii) firms with low leverage and volatility. Duffie and Lando (2001) suggested that allowing for accounting noise could solve issue...

We develop the first general equilibrium exchange economy with risk-averse investors where firm managers can voluntarily make costly, discretionary disclosures regarding the liquidating value of the firm. This extends the discretionary disclosure setting of Verrecchia (1983) by relaxing the...

By examining a sample of Australian firms going public over the period 1996 to 2003, we jointly study the impact of audit quality on auditor compensation and IPO underpricing. We find that quality (Big 4) audit firms earn significantly higher fees than Non-Big 4 auditors, and audit quality is...

This paper examines the relationship between divergent opinions and post-earnings announcement drift. We provide an improved measure of opinion divergence constructed from the dispersion of order flow across Nasdaq market makers that captures the breadth of divergence that is lost by...