In mergers and acquisitions quot;fairness opinionsquot; are written evaluations of the financial terms of offers for target firms. We use simultaneous equations logit models to identify factors influencing the probabilities of firms obtaining third-party fairness opinions. We find that...

I analyze the effect of auditor choice on acquirers' market values around merger announcements and the factors affecting the interaction between auditor size and the market reaction to the merger announcements. Surprisingly, I find that acquirers audited by the largest accounting firms...

Several studies document that investors systematically overreact to accrual-based accounting information. We address the question to what extent this accrual anomaly is related to different accounting standards. We provide empirical evidence that the accrual anomaly is also present in Germany....

This paper uses a triple difference approach to assess whether the adoption of the Sarbanes-Oxley Act predicts long-term changes in cross-listing premia of affected foreign firms. I measure cross-listing premia as the difference between the Tobin's q of a cross-listed company and a...

Outsiders often have and seek to trade on a firm's material, nonpublic information. For example, lawyers have traded on advance information about the filing of a lawsuit, a social activist has announced a plan to trade on advance information of a boycott, and a hedge fund operator has engaged in...

I exploit a quasi-natural experiment provided by a tax reform in Korea to examine the effect of corporate tax avoidance on firm value, and the interaction between the corporate tax system and corporate governance. First, I find that investors perceive tax avoidance to be, on average, a value...

We study non-officer directors' influence on the accounting conservatism of U.S. public firms. Between 1986 and 2002, all 50 U.S. states enacted laws that limited non-officer directors' litigation risk without changing officer directors' litigation risk. We find that conditional conservatism...

Empirical studies have documented large pre-bid target stock price runups, suggesting significant effects of target stock market on mergers and acquisitions (M&A) outcomes. To understand such effects, we develop an informational feedback model in which a target learns from its stock price about...

We test two complementary theories of optimal trading strategies by analyzing transaction pat-terns of corporate insiders: Information-based theories predict that investors trade faster if they compete with others for exploiting the same information. Liquidity-based theories predict the...

This paper analyzes stealth trading by corporate insiders in US equity markets. Stealth trading is the practice to break up trades into sequences of smaller trades. We find that stealth trading is pervasive and distinguish two explanations. The first argues that insiders break up trades in order...