This paper analyzes the relationship between a firm's demand for different quality auditors and opportunities for earnings management.In our model, the firm simultaneously chooses the bias it introduces into its pre-audited earnings and the quality of its auditor. We show that firms that choose...

A corollary to Murphy's Law is: The other lane always moves faster than my lane. We show that even when the law is objectively untrue, because of sampling bias, people perceive the law as true. A manager who is aware of this perceptual bias will try to structure her budget cutbacks and all other...

In a recent paper, Yoram C. Peles and Meir I. Schneller (1989) ignore the sampling autocorrelation bias. A replication of their work that removes the bias changes their results. With the bias removed, there is no evidence that their three long-term ratios follow an adjustment process. Copyright...

Statement of Financial Accounting Standards No. 87 - Employers' Accounting for Pensions (SFAS No. 87) and Statement of Financial Accounting Standards No. 106 - Employers' Accounting for Postretirement Benefits other than Pensions (SFAS No. 106) allow firms to compute the expected return on plan...

This paper examines a fundamental question of interest to researchers and regulators: Does the market treat disclosed financial statement information as if it is less reliable than information recognized in the body of the financial statements? Specifically, we compare the perceived reliability...

This study investigates the relation between the market value of publicly traded Mexican firms and their disclosures of accounting information adjusted for changing prices. The volatile hyperinflationary environment in Mexico provides an ideal setting for investigating the value relevance of...

This study examines whether the market values financial statement data differently if it is disclosed instead of recognized in the body of the financial statements. We identify a sample of 229 SFAS No. 106 adopters who disclose an estimate of their anticipated liability for retiree benefits...