We examine whether features of bank executives' compensation contracts cause them to take actions that contribute to systemic risk. Using multiple return-based measures of systemic risk coupled with an identification strategy that exploits heteroskedasticity to account for endogenous matching of...

This paper estimates a dynamic model of clients' decisions to switch audit firm and misstate earnings as a function of auditor tenure. Adapting the conditional choice probability framework of Hotz and Miller (1993), which simplifies the estimation to a conditional logit, we find that dynamic...

This paper studies the effect of audit market competition on the clients' cost of bank loans. Exploiting the demise of Arthur Andersen, which differently reduced the local audit market competition of metropolitan statistical areas (MSAs), we find that auditor competition increases the cost of...

This paper examines how credit rating levels affect municipal debt issuers' disclosure decisions. Using exogenous upgrades in credit rating levels caused by the recalibration of Moody's municipal ratings scale in 2010, we find that upgraded municipalities significantly reduce their disclosure of...

Theory posits that investors can rationally infer the implications of strategic nondisclosure for firm value, pressuring managers to voluntarily disclose information. This study documents that the lack of an earnings guidance predicts an abnormal return of -41 basis points around the subsequent...

This paper examines whether investor learning about profitability (i.e., the mean of earnings distribution) leads to persistence in disclosure decisions. A repeated single-period model shows that persistent investor beliefs about profitability lead to persistent disclosure decisions. Using...

We examine two distinct channels through which going concern opinions can be associated with the likelihood of bankruptcy: auditors have better access to information about their clients' bankruptcy risk and going concern opinions directly induce bankruptcies. Using a bivariate probit model that...

Recent SEC regulations mandate that hedge fund advisers provide narrative disclosures of their business and operations. We find that 40% of these disclosures contain inconsistencies regarding advisers' regulatory histories, conflicts of interest (COIs), and risks. Inconsistencies are associated...

This paper examines the effect of greater transparency on firm investments. Using a difference-in-differences design, we find that greater transparency, due to an increase in reporting credibility, reduces the level and efficiency of intangible investments. Our findings can be explained by...

This paper examines how credit rating levels affect municipal debt issuers' disclosure decisions. Using exogenous upgrades in credit rating levels caused by the recalibration of Moody's municipal ratings scale in 2010, we find that upgraded municipalities significantly reduce their disclosure of...