Investors have strong economic incentives to engage in unbiased information search in order to maximize the expected value of their investments. I examine whether an investor's psychological preference for information that supports his past investment decisions dominates his economic incentive...

We surveyed 194 experienced, nonprofessional investors to examine the relations between their perceptions of the frequency of financial statement fraud in the economy, their use of financial statement information, the importance they place on conducting their own fraud risk assessments, and...

The PCAOB is concerned about auditors' tendency to ignore relevant information that is inconsistent with management's assumptions underlying complex estimates. We find that priming auditors to consider how management arrived at a particular assumption helps curb aggressive reporting by...

We surveyed 194 experienced, nonprofessional investors to examine the relations between their perceptions of the frequency of financial reporting fraud, their use of financial statement information, the importance they place on conducting their own fraud risk assessments, and their use of fraud...

During a look-back analysis, auditors review prior-period evidence to understand estimation inaccuracies and assess the reliability of management's estimation process. We find that evidence specificity moderates the relation between the consistency of an estimation inaccuracy with management's...

We examine whether increased transparency in the comparison of financial measures and nonfinancial measures (NFMs) influences nonprofessional investors' reactions to the risk of fraudulent financial reporting. We consider a comparison of key financial measures and NFMs to be transparent when the...

We examine the incentives of socially responsible firms, relative to a set of control firms, to engage in earnings management. We measure socially responsible behavior using various proxies of corporate social responsibility, and earnings management using abnormal levels of accruals, cash flows,...

Standard setters have long deliberated the appropriate accounting for goodwill, with ambiguity surrounding its useful life complicating the issue. Recently, the FASB considered mandating a default useful life for goodwill with an option to deviate, but later decided to pause their deliberations...