This paper studies the role of conservative accounting standards in alleviating rational yet dysfunctional unobservable earnings manipulation. We show that when accounting numbers serve both the valuation role (in which potential investors use accounting reports to assess a firm's expected...

Signaling is the most commonly cited explanation for stock repurchases in the academic literature. Yet, there is little evidence on whether managers intentionally use repurchases as signaling devices. Using a firm's financial reporting behavior to infer managerial intent, we find evidence...

A firm meets or beats expectations when it reports earnings that are at or above the consensus analysts' forecast. We argue that two types of firms MBE: strong firms who commit to future performance and signal future earnings by MBE, and weak firms who attempt to mimic strong firms by managing...

Prior research documents that conditional conservatism, measured as the asymmetric timeliness of earnings reflecting bad versus good news, varies with cross-country differences in institutional regimes. In this paper, we examine the determinants of conditional conservatism and related earnings...

This article solves a model that links earnings quality to the equity risk premium in an infinite-horizon consumption CAPM economy. In the model, risk-averse traders hold diversified portfolios consisting of a risk-free bond and shares of many risky firms. When constructing their portfolios,...

This paper examines whether currently available financial disclosures on acquired entities allow investors to effectively predict goodwill impairment, a task that has become more important following the recent abolishment of goodwill amortization. We track the performance of acquired companies...

This study investigates whether compensation committees seek to prevent opportunistic reductions in Ramp;D expenditures. I hypothesize that changes in Ramp;D spending are more strongly positively associated with changes in CEO compensation in two situations: (1) when the CEO approaches...

This study explores the impact of corporate takeover defenses on the extent of earnings management in the U.S. Theoretically, it is not obvious whether takeover defenses alleviate or exacerbate earnings management. I examine four well-known corporate takeover defenses; blank check preferred...

We survey 401 financial executives, and conduct in-depth interviews with an additional 20, to determine the key factors that drive decisions related to performance measurement and voluntary disclosure. The majority of firms view earnings, especially EPS, as the key metric for an external...

In this study, I examine the association between the credibility of the financial reporting system and the quality of governance mechanisms. I use a sample of 87 firms identified by the SEC as fraudulently manipulating their financial statements. Consistent with prior research, results indicate...