In this study, we provide direct evidence on the association between balance sheet classification shifting (BSCS) from current to long-term liabilities and non-articulated operating accruals. We first develop a measure of BSCS and then document a positive association between BSCS and...

A unique feature of Chinese auditing and one under consideration for adoption in the U.S. is regulatory oversight of individual auditors. This paper analyzes enforcement actions by the China Securities Regulatory Commission (CSRC) against engagement auditors and investigates whether audit...

Purpose: The purpose of this paper is to investigate the effect of non-articulation on analyst earnings forecast quality. The authors look for evidence on the relationship between non-articulation and analyst earnings forecast properties: forecast inaccuracy, forecast dispersion and forecast...

We show that board interlocks transmit bank shocks into the real economy using a sample of 1,245 U.S. bank enforcement actions (EAs) between 1990 and 2017. When a non-financial firm (NFF) and bank share a common director, NFF stock prices decline around bank EA issue dates. The effect is...

This paper reexamines whether investors value payout and why. I study abnormal stock returns around regulatory enforcement actions that restrict bank dividends and repurchases. Market reactions are significantly worse for enforced banks that pay out than for those that do not. Withstanding...

In April 2012, Delta Air Lines (Delta) purchased a mothballed oil refinery. We use this case to illustrate when, how, and why vertical integration can hedge input price risk. First, we show that stockholders and creditors expected the move to create wealth. Consistent with their predictions,...

We propose a parsimonious metric – the Adjusted Benford score (AB-score) – to improve the detection of financial misstatements. Based on Benford's Law, which predicts the leading-digit distribution of naturally occurring numbers, the AB-score estimates a firm-year's likelihood of financial...