We develop a model to analyze how board governance affects firms' financial reporting choices, and managers' incentives to manipulate accounting reports. In our setting, ceteris paribus, conservative accounting is desirable because it allows the board of directors to better oversee the firm's...

We examine how strategic trade affects expected returns in a large economy. In our model, both a monopolist (strategic) informed trader and uninformed traders consider the impact of their demands on prices. In contrast to settings with price-taking traders, private information never eliminates a...

We use required 8-K filings around major borrowings to shed light on firms' choices of whether to comply with SEC disclosure rules. We first develop a simple model in which the firm weighs the benefit of obscuring the disclosure of an adverse event, against the cost of failing to comply with a...

We examine the cross-sectional relation between leverage and future returns while considering the dynamic nature of capital structure and potentially delayed market reactions. Prior studies find a negative relation between leverage and future returns that contradicts standard finance theory. We...

We examine how alternative accounting measures of fair value impact the ability of debt covenants to mitigate inefficient investment decisions. In our setting, shareholders make a non-contractible project choice after signing a debt contract. At a later date, the project can be abandoned and new...

We examine the relation between workplace safety and managers’ attempts to meet earnings expectations. Using establishment-level data on workplace safety from the Occupational Safety and Health Administration, we document significantly higher injury/illness rates in firms that meet or just...

Recent studies and some policy experts have posited that dividends indicate higher quality earnings. In this study, we test this conjecture by comparing the dividend policies of firms accused of accounting fraud to those of firms not accused of accounting fraud. Specifically, we examine whether...

This first chapter develops an economic model of the firm linking current financial and non-financial measures to future earnings for retail banks. The data support the associations among current financial and non-financial measures predicted by model, suggesting that the economic model is...