Sloan (1996) and several follow up papers show that the stock market behaves as though it cannot understand the implications of accruals for future earnings. We propose and find evidence consistent with the hypothesis that risk-averse arbitrageurs are unable to eliminate accrual related...

This paper investigates the possibility of false signaling by firms announcing open-market stock repurchases. We examine a sample of 281 open-market share repurchases, with the self-styled reason of undervaluation, by firms between 1993 and 1998. Our results showed no evidence of an upward...

Prior studies suggest that managers use their reporting discretion to signal their private information. Because of the litigation risk associated with inflating earnings, we conjecture that managers are more likely to use their reporting discretion to signal favorable private information when...

This study investigates whether bank managers use their discretion in estimating loan loss provisions to convey information about their banks' future prospects. Bank managers' propensities to signal their private information vary cross-sectionally because they face different conditions and have...

I examine the market's efficiency in processing manipulated accounting reports and provide an explanation for the post-merger underperformance anomaly. I find strong evidence suggesting that acquiring firms overstate their earnings in the quarter preceding a stock swap announcement. I also find...

This study investigates the implications of bank managers' discretion over their loan loss provision. It empirically assesses whether discretionary loan loss provision contains both signaling and income smoothing components. To do so, the study identifies different environments in which either...

There is a positive association between stock-for-stock acquirers' pre-merger abnormal accruals and post-merger announcement lawsuits. The market only partially anticipates the effects of post-merger announcement lawsuits at the merger announcement and post-merger announcement long-term market...

Bradshaw, Richardson, and Sloan (BRS) find a negative relation between their comprehensive measure of corporate financing activities and future stock returns and future profitability. Noticing that accounting accruals are increases in net operating assets on a company's balance sheet, we...

This paper finds that firms that meet or beat current analysts' earnings expectations (MBE) enjoy a higher return over the quarter than firms with similar quarterly earnings forecast errors that fail to meet these expectations. Further, such a premium to MBE, although somewhat smaller, exists in...

In this study we examine the response of equity market participants to a wide variety of significant public announcements. Specifically, we examine total and directional trade patterns across 5 investor groups in the 10 trading days centered on the announcement. We utilize the TORQ database to...