This paper develops an agency model in which stock-based compensation is a double-edged sword, inducing managers to exert productive effort but also inducing managers to divert valuable firm resources to misrepresent performance. We examine how the potential for manipulation affects the...

We examine the association between CEO reputation (proxied by the extent of press coverage) and the quality of the firm's earnings (proxied by two accruals-based measures). We test three explanations for an association between these constructs: the efficient contracting hypothesis suggests that...

This study investigates whether bank managers use their discretion in estimating loan loss provisions to convey information about their banks' future prospects. Bank managers' propensities to signal their private information vary cross-sectionally because they face different conditions and have...

This paper examines the Parmalat case, with particular regard to the accounting and corporate governance issues which caused the scandal. The aim of the paper is to understand why the financial reporting system and the corporate governance system have failed in the Parmalat case. It describes...

This study examines the association between institutional ownership and Australian firms' aggressive earnings management strategies. In contrast to similar studies, this study does not assume that the two views on how institutional ownership associates with firms' earnings management behaviour...

In recent years, practitioners and academics have argued that traditional discounted cash flow (DCF) valuation models do not adequately capture the value of managerial flexibility to delay, grow, scale down or abandon projects. The insight is that a business investment opportunity can be...

Asymmetric information and mechanisms for its resolution in the initial public offering (IPO) process are subjects of extensive research and debate. In this paper, we investigate the impact of one such mechanism, namely voluntary disclosure of management earnings forecasts by issuers of IPOs, as...

In this paper I examine the impact of mutual fund manager replacement on subsequent fund performance. Using a sample of 393 domestic equity and bond fund managers that were replaced over the 1979-1991 period, for the underperformers I document significant improvements in post-replacement...

Corporate law holds boards of directors responsible for the financial reporting process. This raises the possibility that boards will constrain earnings management activity. This paper tests for evidence of an empirical association between board effectiveness and earnings management, as proxied...

This study investigates the manipulation of accounting earnings in the period preceding the announcement and completion of stock for stock mergers by a sample of acquiring firms. Results indicate that in the quarters prior to the merger, acquiring firms manage earnings upward. This result is...