We investigate the association between errors in management forecasts of subsequent year earnings and current year accruals. In an uncertain operating environment, managers' assessments of their firms' business prospects are imperfect. Since managers' imperfect business assessments influence...

Controlling for firm-specific characteristics determining financial reporting quality, this paper finds evidence of a negative association between firms' total risk and financial reporting quality. While the results imply that firms providing financial information of higher quality do not...

In the winter of 2005, former HealthSouth CEO Richard Scrushy went on trial for fraud after he and other executives at HealthSouth, which specialized in outpatient surgery, rehabilitation, and physical therapy, were accused of inflating profits. The trial attracted a lot of attention, not only...

This case series (labeled A through C, UVA-E-0274, UVA-E-0274, and UVA-E-0275) focuses on an employee in the asset-management division of the Birmingham-based HealthSouth who suspects possible fraud in the company's accounting practices. The employee's suspicions were correct (see the A case,...

Lewis Driscoll faces a number of challenging property, plant, and equipment issues. If he purchases a new crane, what ancillary costs should be capitalized? What depreciation method should he choose? How should he account for disposal options for the old forklifts? Not only will his decisions...

The purpose of this study is to investigate into the discretionary accruals of the client companies of sanctioned auditors before sanction enforcements and changes thereafter. We find that signed discretionary accruals of the sanctioned auditors' client companies are significantly more favorable...

This study explores causes and effects of business combinations disclosure level. Investigating the association between disclosure level on business combination and acquirers' future performance, I find that acquirers' future performance as measured by the change in ROA and by abnormal stock...

Rules implemented by the U.S. Securities and Exchange Commission in 2003 impose additional disclosure and filing requirements on firms publicly disclosing non-GAAP earnings. We find the regulations produced (1) modest declines in the frequency of special- and other-item exclusions, (2) a decline...

This paper analyses accounting accruals that may relate to earnings quality and its information content. The characteristics specifying earning quality are discussed according to research surveys of earnings quality. These are compared with the characteristics of accounting income specified by...

Several recent papers employ unsigned measures of discretionary accruals to test hypotheses that predict general classes of firms will engage in earnings management, without specifying the direction or the time period in which the earnings management occurs. We argue that the research design...