We examine how the provision of quarterly earnings guidance is affected by constraints on earnings management. We argue that costs of falling short of one's own guidance make managers reluctant to issue guidance without sufficient flexibility in their financial reporting system to manage...

This paper discusses the use of M&A to facilitate earnings management. The accounting procedures we analyse variously create earnings which would not be reported in the absence of M&A; or reduce reported earnings; or shift earnings between accounting periods. The motivation for deploying the...

We study the link between measures of stock options' volatility and firms' real earnings management (RM). We hypothesize that RM causes uncertainty in the value of a firm's common stock and, as a result, increases the volatility spread and skew of the firm's options. Spread and skew proxy for...

We revisit the asymmetric timeliness of earnings as proposed by Basu (1997). For a large sample of US firm years from 1970-2019, we show that earnings are asymmetrically timely with respect to bad economic news, and that this is robust to the declining timeliness of good news, different time...

We explore how the readability of annual reports varies with earnings management. Using the Fog Index to measure readability (Li 2008), and focusing on the management discussion and analysis section of the annual report (MD&A), we predict and find that firms most likely to have managed earnings...

This paper examines the relationship between annual report readability and firm performance and earnings persistence. This is motivated by the Securities and Exchange Commission's plain English disclosure regulations that attempt to make corporate disclosures easier to read for ordinary...

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

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

Mispricing and risk have both been suggested as explanations for the cross-sectional relation between stock returns and firm characteristics such as accruals. As emphasized by Ferson and Harvey (1998) and Berk, Green and Naik (1999), it is difficult to evaluate these competing explanations...