We examine the information role of accounting disclosures on warranties, utilizing a database that became available due to the requirements of FIN 45. First, because firms use warranty policies as a business strategy to promote their products, a warranty reserve can serve two roles: an...

Balance sheet figures must be reliable and need not necessarily be value relevant. In order to protect the company's creditors, and to safeguard the investing public against the possibility of earnings management, intangible assets should only be recognized when the most stringent of standards...

We examine the effect of the Sarbanes-Oxley Act (SOX) on the extent of aggressive/conservative reporting behavior of public companies. SOX imposes considerably greater potential penalties on CEO/CFOs who engage in financial wrongdoing; therefore, risk averse managers are likely to report lower...

This paper finds that CEO stock options influence the choice, amount, and timing of funds distributed as a buyback. These results support two research expectations - that buybacks impose option-induced agency costs on outside shareholders, and that managers benefit from weak governance and...

We examine how the transition from local GAAPs to IAS/IFRS of companies that are publicly traded on a European stock exchange affects earnings management. To measure earnings management we apply 15 different proxies. In analyzing 17 European countries and more than 18,000 firm-year observations...

We revisit the role of the cash and accrual components of accounting earnings in predicting future cash flows using out-of-sample predictions, firm-specific regression estimates, and different levels of aggregation of the dependent variable, with market value of equity as a proxy for all future...

This study examines the association between CFOs' equity incentives and earnings management. CEOs' equity incentives have been shown to be associated with accruals management, beating earnings benchmarks, and earnings restatements (Bergstresser and Philippon, 2006; Cheng and Warfield, 2005; McAnally et...

I find that goodwill write-offs under Statement of Financial Accounting Standards No. 142 (SFAS 142) are associated with future expected cash flows as mandated by the standard. However, there are indications that goodwill write-offs lag behind the economic impairment of goodwill. Additional...

I develop approaches that quantify the use of discretion for the three main assumptions used for the financial reporting of defined benefit pension obligations: the expected return, the discount rate, and the compensation rate. I then apply these approaches to two regulatory events that affected...

This is Professor Cunningham's Introduction to his renowned edited collection of Warren Buffett's famous letters to shareholders of Berkshire Hathaway Inc. The collection was originally prepared for a symposium held in New York City in 1997 and has been regularly updated through five editions,...