This paper examines whether firm managers engage in the expectation management of their current performances through their own forecasts and consecutive adjustments. Expectation management in order to achieve positive surprises by lowering analyst forecast levels has been documented (Bernhardt...

This paper develops a new theory of CEO compensation based on the opacity of the internal workings of corporations to outsiders and the CEO's ability to divert or tunnel corporate resources to self-enriching uses. In this setting, neither high powered option compensation nor fixed salary...

I examine whether earnings that are smoother or more volatile than cash flows provide or garble information. Consistent with theories that predict more informed trading when public information is less informative, I find that bid-ask spreads and the probability of informed trading are higher...

This paper uses a principal-agent model to study the interaction between hedging and earnings management. The key assumption is that hedging makes earnings management more costly.In this model, hedging is efficient if the hedging decision is contractible, since it reduces both the risk premium...

Compared to non-family firms, family firms face less severe agency problems due to the separation of ownership and management, but more severe agency problems that arise between controlling and non-controlling shareholders. These characteristics of family firms affect their corporate disclosure...

This study examines how accounting quality relates to firm-level capital investment efficiency. Our first hypothesis is that higher quality accounting enhances investment efficiency by reducing information asymmetry between managers and outside suppliers of capital. Our second hypothesis is that...

This paper develops an agency model in which stock-based compensation is a double-edged sword, inducing managers to exert productive effort but also inducing managers to divert valuable firm resources to misrepresent performance. We examine how the potential for manipulation affects the...

Asymmetric information and mechanisms for its resolution in the initial public offering (IPO) process are subjects of extensive research and debate. In this paper, we investigate the impact of one such mechanism, namely voluntary disclosure of management earnings forecasts by issuers of IPOs, as...

The realization of security gains and losses to manage earnings in publicly-traded bank holding companies has been documented in a large number of studies, but very little is known about why managers engage in this behavior. Two possible explanations for earnings management put forth by...

This paper examines the relation of voluntary disclosure of management earnings forecasts and information asymmetry to insider selling through secondary equity offerings. We hypothesize that the pattern of voluntary disclosure and level of information asymmetry prior to secondary equity...